LevelUp's Passbook integration goes live with Capital Teas
Capital Teas is the first LevelUp partner to give Passbook users the ability to store a merchant-branded card in Apple's mobile wallet.
One facet of Apple Pay that may have been overlooked amid the hubbub over Apple's initial announcement was that Passbook became a true mobile wallet.
Apple's previous Passbook versions centered on things that were on the periphery of payments, such as the storage of airline boarding passes, event tickets and loyalty cards (Starbucks was an exception with its payments feature). But now that Apple Pay mixes with Passbook on the new iPhones, users can go to one place to access network-branded payments options, closed-loop prepaid cards and loyalty cards instead of dealing with a disjointed experience.
LevelUp, which positions itself as a mobile-first payment and loyalty company, wants to help businesses enter Passbook (by way of the recent iOS 8 update) so that a merchant's branded card sits alongside American Express, MasterCard and Visa for those consumers who have the new iPhone. The ideal outcome for LevelUp and its partners is that a customer will choose the merchant's branded card (or Pass) to pay and get rewarded for doing so. In return, the merchant receives important data about their customers' behavior they otherwise would not have received if a network card were chosen.
"What has us excited about [Passbook integration] this time around is that now Apple is sort of training people to look to their phone as their mobile wallet with payments being the core component of a wallet," Seth Priebatsch, LevelUp's chief ninja, told Mobile Payments today in an interview earlier this week. "It's now a great opportunity for us and our merchants."
LevelUp Thursday announced Capital Teas based in Annapolis, Maryland, is the first retailer the company worked with to integrate a merchant-branded card with Passbook. The specialty tea provider is scheduled to launch its app (powered by LevelUp) in November for iOS and Android. Apple iPhone users will have the ability to add a Capital Tea-branded Pass to Passbook and use it to pay at the point of sale. Capital Teas will add mobile ordering at a later date.
LevelUp announced its Passbook integration plans on the same day Apple revealed Apple Pay. That should come as no surprise as Priebatsch and his team were up to speed on what Apple planned to announce.
"We're riffing off Apple a little bit, as they're calling it one-touch payment," Priebatsch said. "We're calling it one-touch payment and loyalty. We're bringing those two actions together. That's always been our business model."
Rick Oglesby, a senior analyst and consultant for Double Diamond Group, believes LevelUp hits the mark with its Passbook integration offering. More consumer eyeballs will be on Passbook now than ever before, and merchants will need to be involved with that kind of attention grabber, he said.
"The inclusion of open-loop payment instruments in Passbook is actually a very good thing for any closed-loop payment instruments that merchants wish to promote," Oglesby told Mobile Payments Today. "Passbook is capable of storing many more items than a physical wallet, and it's capable of organizing those items much more efficiently and/or prompting for specific usage at specific times, making the wallet not only more convenient but also more competitive."
Even with the Passbook integration, LevelUp will still lean on QR codes to initiate payments at the point of sale, since Apple blocked third-party developers from the NFC chip in its new iPhones. Priebatsch believes Apple will lift that restriction next year.
Consumers with older iPhones also can store a Capital Teas Pass in Passbook and pay with a QR code.
Meantime, the company also will integrate with Google Wallet and will ship new NFC-enabled scanners to its merchants beginning this quarter and into next year. The new scanners also will have a Bluetooth feature.
"Merchants and any closed-loop payment components that they would like to promote in-store will have a strategic advantage via beacon technology," Oglesby said about Bluetooth. "Because they will control any in-store beacons, they can drive specific messaging and promotional activity within Passbook while the consumer is in-store."
Priebatsch views the shift from plastic to mobile payments at the point of sale as a great opportunity for merchants to this time have a say in how quickly this particular shift happens. Merchants had a small role in the cash-to-plastic swing over the last 15 years, he said. Priebatsch added the plastic-to-mobile shift can happen in as little as three to five years, but merchants need to give consumers a reason to change their behavior with rewards. And LevelUp adds a bonus to merchants with a cheaper interchange rate and customer data.
"We're not pushing a replacement for accepting Apple Pay and Google Wallet," Priebatsch said. "It's an opportunity to invite customers when paying with their phones to transition to your own infrastructure, and that enables you to do all types of clever things."
That was the value Capital Teas saw in getting involved with LevelUp for the Passbook integration, Priebatsch said. "I think what Capital Teas saw specifically with this is, if they play a role in this next transition, they can leverage what we think is the last shift in payments and rewrite the rules on customer engagement."
Will Hernandez Will Hernandez has 14 years of experience ranging from newspapers to wire services and trade publications. Before becoming Editor of MobilePaymentsToday.com, he spent two years as the content manager for PaymentsJournal.com, a leading payments industry news aggregator and information hub published by Mercator Advisory Group. Will spent four years covering the payments industry as an associate editor for multiple publications in SourceMedia's Payments Group based in Chicago.