LevelUp has been quietly building a quite expansive payment network. They’ve now set up shop and signed up merchants in large cities from Birmingham to Seattle. Purely based on press / PR, one would assume that Dwolla is the dominant force in the emerging landscape of 5th networks. However, based on merchant / geographic coverage and funding, LevelUp is well ahead. Dwolla is still focused in Iowa (although they’ve recently announced the opening of a NY office) and have raised around $6M vs. $32M for SCVNGR (parent co. of LevelUp).
It’s also interesting to note that LevelUp is offering a 0% processing fee for merchants. Although I don’t know the exact details, it appears as though their revenue is earned via performance incentives, like repeat purchases. If this is the case, their business model represents a substantial threat to Dwolla - Dwolla’s infrastructure is wholly focused on reducing merchant fees. As these two players grow, it will be interesting to see how they compete or potentially work together to change the processing landscape.