LevelUp, a mobile payment software app created by Boston start-up Scvngr, said on Thursday that it will eliminate the fees that merchants love to hate.

Retailers have long protested so-called interchange swipe fees charged by credit card and other payment companies, which generally range from 1.5 percent to 3 percent of each purchase, cutting into profits. By wiping out such fees, ­LevelUp hopes to get more retail operations to adopt its service.

LevelUp will collect a different fee from merchants, but only if they run a promotional campaign using the service. In those cases, LevelUp will charge 35 cents for every dollar of credit redeemed through a promotion. For example, if a coffee shop runs a campaign that offers $2 off a purchase, LevelUp will get 70 cents. The total cost to the merchant will be $2.70 — the discount plus the fee — but routine payment processing will be free.

LevelUp’s smartphone app works by displaying a bar code that is linked to a user’s credit card. A merchant who has installed a LevelUp device can scan the bar code to process the payment. LevelUp was previously charging merchants a processing fee of 2 percent of each purchase.

Seth Priebatsch, founder of Scvngr, said he is confident that the company can survive without collecting the payment fees, even though LevelUp must continue to pay similar fees to the credit card companies its customers use. “We have over 3,000 merchants, most of them in the food service area, and 98 percent of them are running campaigns,” Priebatsch said.

Priebatsch said in a typical campaign LevelUp provides the merchant with data such as how many people took advantage of the offer, how much was spent, and how many times each customer came back after the promotion. The company also provides participating retailers with aggregated data from other users that can help a merchant target future campaigns.

LevelUp is competing in a crowded field of mobile payment services, including Google Wallet, PayPal, and Square. The traditional credit card companies — Visa, MasterCard, and American Express — are also offering new payment systems.

Started as a mobile phone game company in 2008, Scvngr launched its LevelUp payment product in 2011. The company is backed by venture investments from Google Ventures, Balderton Capital, Continental Advisors, Highland Capital, and Transmedia Capital.

In addition to its 3,000 merchants, LevelUp has roughly 200,000 active users — consumers who spend about $2 million a month on its network.

Mike Schneider, who heads the Digital Incubator at Watertown advertising firm Allen & Gerritsen (which does not have any business relationships with Scvngr), said that the free payment processing move makes sense for LevelUp “because the value they offer isn’t in commodity transactions, it’s providing acquisition and loyalty programs, customer analytics, conversion-driven targeting, and advertising wrapped in a natural user experience. That’s their value, so that’s what they should be charging for.”

Scvngr’s Priebatsch predicted that as competition between mobile payment systems heats up, payment processing fees may become a thing of the past.

“The process of moving money is now becoming a commodity,” he said. “We’re entering an era in which merchants should get — and will eventually only pay for — value above and beyond the transaction.”