Comments on: LevelUp declares payment war, kills interchange fee for merchants

By: Dagg

Dagg — Thu, 02 Aug 2012 19:25:39 +0000

Eliminatig fees? Too early, to simple to last, too (you name it). Next please

By: Dave Mackey

Dave Mackey — Fri, 13 Jul 2012 23:13:20 +0000

Way to go LevelUp.

By: Bill Shaw

Bill Shaw — Fri, 13 Jul 2012 19:45:19 +0000

Frankly, zero interchange has made sense for many years…Acquirers and issuers would adjust their fee structure without interchange income and expense and the expenses incurred by Visa and Mastercard for calculating and monitoring is eliminated…After all, interchange began 40 years as a means of issuers to offset start up fees and losses related to mass issuancance of cards…Now this revenue stream is used to help losses related to subprime card loans…..Eliminate interchange and both sides adjust their marketing plan and fee structure…

By: Wayne Steiger

Wayne Steiger — Fri, 13 Jul 2012 18:00:40 +0000

Good luck with this model predict that in less than a year two things will happen they reverse course on this model and that they bleed serious cash.

This is nothing new others have tried and failed miserably.

By: John

John — Thu, 12 Jul 2012 14:22:11 +0000

Your link is to levelup.com, the actual site is thelevelup.com

By: Brian Roemmele

Brian Roemmele — Thu, 12 Jul 2012 13:52:15 +0000

Ryan,

Great article. The price war that will come to the Payments industry will be interesting but at the end of the day will be deemed just as foolish as history has shown. I believe LevelUp has some rather great strengths and holds some great promise, however they would have done well to have truly studied PayByTouch and Steve Case’s Gratis Card/Revolution Money Card. Both products became “free” also, quite close to finally going out of business. There is a treasure of rich information that can be found just studying these two very, very highly financed former media darlings. Both companies had a who’s who of famous investors even up to Al Gore. Both companies tried a model where very deep “big data” analytics and producing new customers were the selling points, both companies failed spectacularly.

I could write a book on just these two companies out of the dozens that haver tired this very concept. There are really a multitude of reasons why each model failed. Most of it came by not empirically understating history, the true needs of the merchant and the true need of the consumer.

The reality is that no company gets a better deal on the Wholesale cost from Visa and MasterCard called Interchange. Interchange is a fixed cost for each card type, if LevelUp is processing the cards correctly. There are some rather unknown and unused ways for them shift transactions in to different Interchange categories but I am certain they are not doing this. The only negotiation they can do to lower costs is to ask the Processor and/or Acquirer to lower the markup and processing costs.

I am certain that the great talent at LevelUp will come to the same conclusion that PayBy Touch and Steve Case did. I truly believe there are some rather huge opportunities for this product and could meet with great success. I can see 4 things they can do today to become far more valuable to both the consumer and the merchant. Unfortunately this may prove to be a regrettable misstep.

http://www.quora.com/Brian-Roemmele