Today food trucks, tomorrow the world? Mobile wallet app LevelUp targets Seattle geeks

Contigo owners Erik Gust and David Rodriguez encourage cashless customers to pay with LevelUp, which saves them money on processing fees. (Photo: Mónica Guzmán)

If you’ve gotten a free lunch at a South Lake Union food truck lately, it’s probably thanks to Boston-based mobile wallet app LevelUp.

“I probably see those guys out there at least once a week,” said Mark Worster, founder of food truck locator and resource hub SeattleFoodTruck.com. “They’re good to talk to.”

LevelUp, a product of parent Google Ventures company SCVNGR, has been running lots of promotions with the more than 150 Seattle businesses now accepting payments with the app, but none more visibly to local techies than its come-one, come-all lunch specials at South Lake Union trucks.

The trucks seem to like it. “I haven’t run into anybody who’s complained about it,” Worster said.

You’ll find a few South Lake Union regulars, though, who can’t believe what it all must cost.

“It’s not that I don’t appreciate the $50 worth of delicious food truck lunches they’ve treated me to so far, but at a certain point it started to feel insane. After all, they’re a startup, not a bank,” said Giant Thinkwell CEO Adam Tratt. “LevelUp’s customer acquisition tactics are the most aggressive I’ve seen since the dot-com boom ended.”

LevelUp’s seven-member Seattle team has definitely been busy since the company opened its local office in Columbia Tower three and a half months ago. LevelUp did not respond to a question about total downloads in the area, but as David Nelson first reported on his seattlepi.com blog, 465 people used the app to make 1,135 transactions at Sunday’s Mobile Food Rodeo, where the company offered hundreds of ticket holders $5 off per truck to pay with the app.

“Food trucks are no. 1. They’re going to be great merchants for us,” said Seattle team lead Smith Anderson. “They have a very loyal user base, and those are exactly the users we’re looking for — people who have habits.”

It doesn’t hurt, of course, that South Lake Union at lunchtime is almost literally crawling with smartphone-toting, new app-loving, only-got-time-for-a-quick-bite geeks.

I first noticed the LevelUp evangelists about two months ago on Harrison Street, hawking discounts and urging me to put away my cash and cards to buy my grub from Lumpia World with LevelUp. I thought about it, but didn’t have time to risk any hassle. I finally gave it a go on Wednesday, when I ordered two (delicious) mushroom tacos from Contigo, a modern Mexican food truck parked off Boren.

I downloaded the app, created an account, scanned in my credit card with my phone’s camera (always a nice feature), filled in a couple blanks and got a screen with a QR code. Contigo owner Erik Gust scanned that code on my phone with his, and seconds later my phone buzzed with a receipt for $4.75, minus a $1 starting credit. Done.

Like Worster, who uses the app everywhere he can, I had no complaints. Neither did Gust. He gets analytics on all LevelUp transactions, a platform for customer loyalty programs he can design and track, and, if he didn’t use his own phone to take payments, LevelUp would rent him one for $25 a month, after a three-month free trial.

Best of all for Gust, where my lunch could’ve cost him upwards of 25 cents in credit card processing fees, running it through LevelUp cost him only 2 percent of the transaction total, or about 9 cents.

Square, a credit card reader that attaches to smartphones and also offers lower credit card processing fees to merchants, charges 2.75 percent per swipe.

“It’s the cheapest thing out there,” Gust said.

Cheap for him. Not at all for LevelUp. The company, which runs on-the-ground marketing campaigns in a total of eight cities, handles almost $2 million a month in transactions from nearly 2,000 merchants nationwide. That’s a growing figure the company says allows it to negotiate even lower processing fees for merchants. The rate dropped from 2.25 percent to 2 percent just before the Seattle office opened earlier this year.

The goal, Anderson said, is to bring those processing rates to an unbeatable 0.

“Yes, we’re on the ground doing a lot of guerrilla marketing and spending a decent amount of money acquiring users. But in the long run, it’s an opportunity,” he said. “It’s going to be important for our future to continue to build a user base as well as get merchants.”

Important how? Anderson left that to the imagination. If LevelUp manages to capture a hefty chunk of mobile transactions in what it gambles is a growing market, it would be well positioned to take advantage of it in a number of ways. As a Google Ventures company, they might just have the resources to pull it off.

LevelUp is sponsoring $10 lunch promos at Jerk Station on Boren May 21 and at Crisp Creperie on Harrison St. May 24.

Today, Seattle food trucks. Tomorrow, the world?

Have a free pork sandwich, and munch on that.

Update: This article has changed to clarify that SCVNGR is the parent company of LevelUp.

  • Guest

    Congratulations to LevelUp on getting big fast! What a great way to enable quicker commerce for the cash-free.

  • Fox

    Do the math. They’ve blown thru nearly $20m of VC money chasing one bad idea after another. The 22 year old Princeton dropout CEO wasn’t that smart after all.

    • Abcandf

      and what have you done, debbie downer? Criticize ideas in the safety of your internet connectoin?

      • Payments

        LevelUp is a plagiarized idea from other Cambridge payment start ups without the same resources as The LevelUp. “Scavenger” is more apt a name than anyone realizes. Hagen leads the IP thievery, and Seth laps it up. If you didn’t originate the idea, you will have no idea where to take it. They’re shooting for an exit, and that’s it.

  • Mdgordon

    Love the app and use it when I can. Bring in more retailers.

  • http://www.facebook.com/mrhammell Eric Hammell

    Bitcoin people, come on..  this is a no brainer..

  • http://twitter.com/codygroth Cody Groth

    Love this app!  I use it all the time in SD.