T-Mobile USA has widened its existing alliance with LevelUp, the startup which enables users to make payments via a QR code on their cellular handsets. The two companies will now partner on an initiative to lease out smartphones that are customised to run as payment readers (pictured) to retailers. The readers, which are based on Android-based LG handsets, are adapted to scan the QR codes downloaded as an app from LevelUp. The partners will charge retailers US$25 per month for using the readers plus a two percent fee for processing payments.  The LevelUp system is a rival to NFC-based technology as well as other new launches such as Square which is already building a customer base fast in the US.

The two companies already have an agreement announced in November 2011 whereby T-Mobile provides cellular and transactional infrastructure to LevelUp. The latter was set up in October 2011 as a new initiative by location gaming firm Scvngr. Users do not make payments from a LevelUp account but rather use it to hold their existing debit and credit cards. Retailers can add rewards to the account for users who return to their location regularly. LevelUp says it already has a presence in 1,200 US retailers.