The Future of Payments is Mobile

• LevelUp Overview

• Data On Mobile Payments Adoption

• What The Future Holds (maybe)

• Q&A

Evan Korzon, VP Strategic Partnerships

Quick IntroductionIt’s nice to meet you all.

Mobile Payment + Loyalty Platform • Pay in-store, order ahead • Loyalty, rewards, CRM platform

• 5,500 merchants running rewards • 3,000,000 users

LevelUp Company Stats • $70 million in funding raised • Google, Highland Capital, Balderton

Capital, Deutsche-Telekom

• ~100 employees • Based in snowy Boston, MA

■■■■■■■■■■■■■■■■■■■■

200+ apps run our white-label SDK.Our SDK enables enterprises to have their own “Starbucks app” at a fraction the cost.

In-store payments via QR code (or Apple/Android Pay) for ultra-fast

checkout.

Order ahead to start orders with the tap of a button, with rich images to make

the food look as good as it tastes.

And no matter how the customer pays, they automatically accrue/redeem the

merchants loyalty rewards.

■■■■■■■■■■■■■■■■■■■■

2016 is the year of mobile payments…But so was 2015… and 2014… and 2013… and 1994.

At least in 2016 the big players have made their bets clear.

■■■■■■■■■■■■■■■■■■■■

But adoption of mobile payments is not great…Did you use Apple Pay for this transaction?

0%

25%

50%

75%

100%

Nov 2014 March 2015 June 2015 Oct 2015 Jan 2016

Yes No

Data from the PYMNTS.com / InfoScout Quarterly Apple Pay Survey.

■■■■■■■■■■■■■■■■■■■■

Acceptance is outpacing adoption.

0

0.25

0.5

0.75

1

Nov 2014 March 2015 June 2015 Oct 2015 Jan 2016

Merchants Accepting Apple/Android Pay

0

65000

130000

195000

260000

Nov 2014 March 2015 June 2015 Oct 2015 Jan 2016

25%

50%

75%

100%

■■■■■■■■■■■■■■■■■■■■

Why aren’t we seeing ignition?Because, replacing the swipe with a tap just doesn’t matter to customers. Here’s what does.

Counter-Based Mobile Payments (QR or NFC)

Mobilely-Initiated Payments (Order Ahead)

Non-Mobile Payments (Cash and Credit)

0%

7.5%

15%

22.5%

30%

Mobile Payments + Loyalty & Rewards + Order Ahead

■■■■■■■■■■■■■■■■■■■■

What would get users interested?To figure that out, let’s look at a mobile payments scheme that has taken off.

Apple/Android/Samsung Pay • Save a few seconds at the counter. • Hard to know where it does/doesn’t work.

• No financial benefit

• 0.5%-1.0% of volume.

Starbucks app. • Save a few seconds at the counter.

• Get loyalty/rewards. • Clearly know where it works and were it doesn’t. • Order ahead and save 5-10 minutes by skipping

the line & having your order ready on arrival. • 21% of volume.

■■■■■■■■■■■■■■■■■■■■

Order ahead, potentially a leapfrogging technology.Starbucks usage jumped 5% in 8 weeks with order ahead. But it’s more than that.

Starbucks Mobile Payment/Loyalty App Usage

0%

5.25%

10.5%

15.75%

21%

Nov 2014 March 2015 June 2015 Oct 2015 Jan 2016

Order Ahead introduced here.

Counter-Initiated Mobile Payment Order Ahead Mobile Payment

■■■■■■■■■■■■■■■■■■■■

0%

12.5%

25%

37.5%

50%

Week -3Week -2

Week -1Week 1

Week 2Week 3

Week 4Week 5

Week 6Week 7

Week 8Week 9

Week 10Week 11

Week 12

It’s not just StarbucksLevelUp has tracked this same data across 5,500+ merchants

Counter-Based Mobile Payments

Mobilely Initiated Payments (Order Ahead)

Non-Mobile Payments

■■■■■■■■■■■■■■■■■■■■

We’ve seen this story before.And there’s good historical analogues for this being the future-state of mobile payments.

Classic Cashier inputs an order and

payment into single-use hardware. Pleasant,

inefficient, expensive, and slow.

Transitionary Step Consumer enters an order

and payment into single-use hardware High cost, and suffers as tech changes.

Future State Consumer inputs an order

into their mobile device. Fast, seamless payment, and

hardware is always up-to-date.

Banking

Travel

Media

■■■■■■■■■■■■■■■■■■■■

Think beyond the counter.The future of mobile payments is likely to be about mobilely-initiated payments.

Classic Cashier inputs an order and payment into single-use hardware. Pleasant,

inefficient, expensive, and slow.

Transitionary Step Consumer enters an order and payment into single-use hardware High cost, and

suffers as tech changes.

Future State Consumer inputs an order on their mobile

device. Fast, seamless payment, and hardware is always up-to-date.

■■■■■■■■■■■■■■■■■■■■

Order ahead also answers the cost question.While NFC adoption puts additional costs/stresses on merchants, order ahead removes them.

Mobile Payments (NFC, QR) • ~$300-$500 upgrade per terminal.

• Slower transactions (EMV!)

• No real improvement to in-store ops

• Currently <1% of transactions, with heavy marketing from aggregate wallets.

• Re-terminalization efforts accelerated by EMV

requirements.

Mobile Initiated Payments (Order Ahead) • ~40% of retailers/restaurants already have it

• Faster lines

• Lower cost of fulfillment

• Currently ~2% of transactions, with only merchant specific wallets available

• Adoption of order ahead will be driven by

minimum wage hike in US and elsewhere.

■■■■■■■■■■■■■■■■■■■■

And many, many other platforms…

Our 50+ integrations enable us to pull menus from and push orders into the POS for not just the 3,500 locations using our enterprise tools, but also the other 308,000 locations on those platforms.

As more merchants enable order ahead, and we build more integrations, we are able aggregate every order ahead experience into one single app.

Integrating order ahead providers to create a network.Order ahead adoption has been held back because it’s one app/site per merchant.

■■■■■■■■■■■■■■■■■■■■

Where does LevelUp’s Order Ahead network exist?Lots of places. Below is a map of places offering order ahead on our integrated platforms.

■■■■■■■■■■■■■■■■■■■■

Look familiar?It should. Because order ahead is a secular trend. LevelUp is simply aggregating/enabling it.

■■■■■■■■■■■■■■■■■■■■

What does the LevelUp app look like?The fastest path from you to your burrito.

Users can see all their past orders and start them with a single tap, or

customize each order.

We display the ready time to the user. They hit start to send it via API right to

the POS. We net a ~5% fee.

With a single tap, orders are printed out at the POS just as if they’re placed in

person. Fast, easy, efficient.

■■■■■■■■■■■■■■■■■■■■

Save time, save money.At our 3,500 enterprise merchants, users earn loyalty & rewards too.

Rewards are automatically applied on purchase. No extra clicks.

Those merchants also get highlighted in the places listing.

When users click into that location they can see available rewards.

■■■■■■■■■■■■■■■■■■■■

Simple… but oh so smart.We know where users are likely to head, and what they want when they get there.

Our algorithms identify user patterns and predictively invite

them to order at opportune times.

With a single swipe, they can start their order, or customize their choices to try

something new.

And again, it’s sent right to the POS, to be ready when they get there. No

waiting, no line, no hassle.

■■■■■■■■■■■■■■■■■■■■

Wrapping things up…Mobile payments are happening, but what exactly that means is not yet super clear.

Key Takeaways • At-counter mobile payment is much-touted, but adoption is minimal. (<1%)

• Adding merchant-specific loyalty/rewards drives material adoption. (10-20%)

• Order ahead (mobile initiated payments( drives material adoption. (20%+)

• Consumer preference leans towards order ahead, versus counter-based mobile payment, when both are available. (Starbucks and LevelUp merchants now seeing 50%+ order ahead at many locations.)

• Mobile initiated payments offer lots of cost/operational benefits and are already deployed by ~40% of restaurants / and 35% of top 100 retailers in US. That’s 308K restaurants and 120,000 retail locations.)

• So as you watch mobile payments evolve, look out for counter-based mobile payments and mobile-

initiated mobile payments.

■■■■■■■■■■■■■■■■■■■■

Thanks!

■■■■■■■■■■■■■■■■■■■■