Capitol Hill restaurants try new ways to pay

LevelUp uses little phone readers like these at Z Pizza that scan your unique QR Code

There’s a new way to pay on Capitol Hill — all you need to do is whip out your smartphone. LevelUp has made its way into the neighborhood and is looking to make your credit card irrelevant. 

“We love it, we like it way more than the credit card companies,” said Joanne Hong at 12th Ave’s Chatterbox Cafe, who started using the LevelUp service last month. “They don’t charge us like crazy with transaction fees like the credit card companies do.”

LevelUp is an iPhone, Android, and Blackberry app that turns your phone into a futuristic payment method. Once you download the app, you link a credit or debit card to a unique QR code (those little weird black and white boxes) on your phone that scans at participating retailers. Not only is LevelUp hoping you’ll like how easy the app makes it to pay, they have also teamed up with retailers to give you incentive to keep paying with the app.

Retailers can set up $5, $10, or $20 free first time credit for people using LevelUp in their store as a way to get you to try new places. Retailers can also set up a loyalty rewards system, deals like “Spend $X, get $Y free” that will live update on your phone every time you use the app to pay. LevelUp also makes tipping easier, giving you a sliding tip percentage scale you can select by tapping your finger. 

While LevelUp was originally only usable in Boston, New York, Philadelphia and San Francisco, the app mades its way into Seattle a little over a month ago. 

LevelUp isn’t the only one trying to make cash registers irrelevant. Square, a startup created by Twitter-founder Jack Dorsey, is an app that effectively turns an iPhone or iPad into a payment service. By attaching a peripheral into the headphone jack, your device can accept credit card payments. While the peripheral and app are free, Square charges 2.75 percent on every credit card transaction. Last year Square had over 500,000 users and was processing $3 million a day. On Capitol Hill though, Square just lost a customer.

Blue Moon Burgers, which originally opened using the Square on iPads, recently switched back to cash registers. “It didn’t work at all,” said an employee at Blue Moon. “Orders and payments weren’t going through. We had to hand write orders and take them back all the time because cooks weren’t getting them. iPads just weren’t made for restaurants.” 

One of the incentives for small businesses to use LevelUp is that the app doesn’t charge retailers with any service fees. Beyond just saving businesses money, the app allows businesses to set up “campaigns” that will alert customers about special deals through LevelUp, sort of like a more direct Groupon.

These “campaigns” are how LevelUp makes its money and gets away without charging transaction fees. When customers take advantage of deals like “$10 free credit for first time customers” or loyalty campaigns like “$20 free when you spend $100,” LevelUp charges 35 cents for each dollar of campaign credit used by the customer.

For instance: say a campaign drives a new customer to a business with a $2 incentive. The customer spends $10. The business funds the $2. LevelUp charges an additional $0.70 for having delivered the new customer.

Hong said that while LevelUp hasn’t taken off as quickly with the older crowd, young people have been embracing it.

“Before the school year ended, it was getting used more frequently,” Hong said. “It’s slowed down a lot now.”

Z Pizza has been surprised with how often people seem to be latching on to the service. During its first week, Z Pizza had a “$10 free credit” deal for in store purchases and deliveries, which boosted their customer counts.

“People use it a surprising amount,” Molly Gentry of Z Pizza said. “We probably get at least 10 regulars who use it. We’ve had people sign up for it on the spot if they forget their card but know their info, which has been useful.”

Even though the app has helped Z Pizza, Gentry said that businesses hasn’t shot up too drastically because of LevelUp. While the free credit deals seem to be drawing in customers, everyone isn’t on board yet. Roman Dilorenzo, a server at Manhattan, said that people have used the service only twice over the entire month the restaurant has been using it. 

“I can’t speak for the other servers, but it’s been really rare for me,” Dilorenzo said. 

You can find a map of participating Seattle LevelUp retailers here.

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14 thoughts on “Capitol Hill restaurants try new ways to pay

  1. Clearly what they need at the intersection of Boren and Pike, is some kind of 40′ jumbotron TV that gives you a split screen CCTV viewing of the north and south bound traffic on Boren Ave. This would allow the average cyclists to break in time and avoid a collision as they cruise through the red light. As it is right now, you bomb through Bellevue and Pike at 40mph, you wont be able to break in time as you cant see any on coming traffic that has the right of way.

    Asking cyclists to actually come to a complete stop at red light intersections isnt very practical. Its like asking drivers to not text while driving, or ask pedestrians to look both ways before they jaywalk. Doesnt seem to be helping, so we might as well spend millions to help them avoid accident, by giving them the tools to further flaunting the law.

  2. LevelUp has been making very fast inroads in gadget-happy South Lake Union since it launched in Seattle. I’ve enjoyed about $100 worth of free and discounted lunches thanks to their heavy promotion.

    I’ve heard mixed reviews from restaurants about LevelUp. A couple of places which the company claims take LevelUp (Thomas St Bistro and Dog in the Park) stopped doing so because of technical problems. Another hot dog stand in SLU booed the very mention of LevelUp. When I asked him why, he just said, “they’re tricksters.”

    The company also has a very lax attitude towards security. The app reduces your credit card to a 2-D barcode that, by default, isn’t even protected with a PIN. You can change your barcode if you worry it’s been stolen, but if that’s a security measure, why doesn’t LevelUp change it after every transaction? As it stands, a simple photo of someone’s cell phone could be worth hundreds of dollars before the poor sap notices. (And if it’s a debit card, imagine the overdraft fees you could rack up!)

  3. When I first downloaded Levelup security was my main concern. I’ve now been using the app for over 3 months and have done some serious research on the company and their security. I was pleasantly surprised to learn that credit card information is actually transmitted by SSL directly to a secure electronic vault. At no time is credit card information ever stored on the Levelup servers. As far as business that accept Levelup, the ones the I frequent are all happy with it. They are actually saving money by accepting it so I feel good using it – like I’m helping them out and saving myself a few bucks at the same time. I’ve also chatted with a many of the employees at promotions and they have been great about answering my questions. They even gave me an Iphone charger! Overall I think it’s one of the coolest and most useful apps I’ve downloaded in a while..

  4. The majority of phones available to the public don’t support NFC, which is one of the many reasons for Google Wallet’s demise.

    Here’s an article from TechCrunch –

    “So where’s LevelUp’s NFC integration, you ask? With a solution that focuses mainly on a QR code reader, one might think that LevelUp believes QR codes are going to beat NFC in the end. Priebatsch says it’s quite the contrary, but that it’s going to take several more years for NFC to hit the tipping point. And what’s more, he doesn’t think the specific technology you use matters to the end-user, NFC, QR Code, ultrasonic — it’s about offering a solution that the majority of people can use, with the majority of credit cards, and building value on top of that agnostic platform.”


    LevelUp is also offering a deal where if you get referred by someone, you get $5 to spend anywhere for free on top of whatever promotional offer the place has. Use the link above for an extra $5 in your pot. There are other people out there who claim to have $10, $15, or even $25 promocodes… They are all lies. As a refer, you get $5 too (and I will if you use the code above), so people try to make their code look better than it is.

    I’ve been using them a little bit and I am worried about their fundamental business model, but as a consumer I’ll ride it while it is here. It links up to an existing credit card or swipe-able debit card and acts as a pass-through for the payment. They pay the transaction fee on the premise that they’ll make money on the promos. For every promotional dollar you get from the store, the store pays LevelUp $0.35. The bet then is that you will have repeat customers using LevelUp and that the initial $0.35 to $0.70 that you pay LevelUp for the initial promotion will pay off long term in lower costs. I’m not sure who foots the bill for the hardware. Here’s the details for businesses:

  6. Everyone should has Levelup installed into their phone and use it for any transactions. it’s a good way to help business owners avoiding their monthly fees or customers won’t get additional charges for processing fees.

  7. The one thing you neglect to add is that most customers will notice the instant that someone else used their QR code because you get an email and push notification instantly after the purchase. Your credit card cannot do that.