LevelUp Drops Payment Processing Fee From 2% to 1.95%
First Time Any Payment Network Has Voluntarily Lowered the Cost of
BOSTON, MA -- (Marketwired) -- 04/16/14 -- Excluding instances of
legal mandate or full-fledged revolts, a payment network has never
voluntarily reduced their processing fees... until today.
Since launch, LevelUp has maintained a mission of "Interchange Zero"
-- the belief that moving money should be free. As part of that
mission, LevelUp made a promise that it would constantly work towards
lowering its own payment processing fees over time.
For the last year, that belief existed merely as a vision. LevelUp
offered a flat 2% processing rate (already the lowest available) on
LevelUp transactions, despite LevelUp's real cost (the fees paid to
card companies to process the transactions) initially being closer to
5.4%. Through a series of advancements to their processing
infrastructure (explained below), LevelUp began to chip away at that
cost bit-by-bit. This past month marked the first time LevelUp broke
even on processing, thus enabling LevelUp to begin delivering on
their vision of Interchange Zero. Starting today, all LevelUp
business partners now pay just 1.95% on payment processing.
"This isn't a promotion," explained LevelUp Chief Ninja Seth
Priebatsch. "It's us making good on a promise we made to our merchant
partners. This is a permanent drop in our fees. And we plan to
continue dropping fees as further processing efficiencies continue to
lower our costs."
LevelUp's new fee rate goes into effect on April 16th. Businesses do
not have to take any action to get the lower rate.
For more details on LevelUp's path towards Interchange Zero, visit
Frequency Asked Questions About Interchange Zero
Why'd it take so long for LevelUp to drop fees for the first time?
Until now, it cost LevelUp more than 2% to process payments. Until
Jan 2013, LevelUp was paying exactly what businesses would have paid
if they were processing cards directly, averaging 5.4% of the
transaction total. LevelUp was simply eating the difference.
How does LevelUp achieve lower fees?
If you pay with LevelUp, you may notice LevelUp doesn't charge you
right away. Instead, transactions are grouped together and only
charged once a month, much like how Apple groups iTunes purchases
together. This process, called "bundling", helps LevelUp lower it's
transaction fees and thus lower the fees charged to merchants.
A 0.05% drop sounds small, is it?
Dropping from 2.00% to 1.95% might not sound like a lot, but
extrapolated across the economy, the drop represents $250 million in
savings for local businesses. Every .01% drop is like a $50 million
economic stimulus pumped back into the local economy.
Why should consumers care?
Though businesses directly pay the $50 billion in payment processing
fees each year, consumers are often impacted in the form of higher
prices. Lower interchange means lower prices. This can be seen most
directly in the LevelUp ecosystem in the form of higher rewards. As
businesses save more with LevelUp, they're able to offer larger
savings and rewards to their loyal customers.
Will Levelup lower fees again in the future?
LevelUp is the largest open payments network. Consumers use their
LevelUp account to pay with their smart device or web browser,
demonstrating the fastest and easiest way to pay. Businesses accept
transactions for just 1.95% flat, thus enabling dramatic cost savings
they can pass along to customers. LevelUp is backed by Google
Ventures, Balderton Capital, Continental Investors, Highland Capital,
Transmedia Capital and T-Venture, the venture arm of
Deutsche-Telekom. Learn more at thelevelup.com.
For media inquiries, please contact
LevelUp Marketing Director
matt [at] thelevelup [dot] com
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