Cashless payment solutions - Way to go for the future

Published by Marta Jajic on 07. August, 2024

Cashless payment closed loop solutions are specialized financial transaction methods used within a confined environment, such as festivals, amusement parks, corporate campuses, and other controlled settings. Unlike open loop systems that work with general-purpose credit or debit cards usable anywhere, closed loop systems are restricted to specific locations or events.


These systems often utilize RFID wristbands, QR codes, or prepaid cards that attendees load with funds and use for transactions within the event area. Using this kind of payment method varies depending on the use case, but in general it enables transfer of what would traditionally include cash only payment to the more modern and simpler digital form of payment.


Payment form factor can vary depending on the type of event, but these are some of the most popular:

  1. RFID Wristbands - These are wearable devices embedded with Radio Frequency Identification (RFID) technology, allowing users to make payments by tapping their wristbands on designated terminals.
  2. Prepaid Cards - Attendees receive cards that they can load with funds at kiosks or online. These cards are then used for purchases within the event premises.
  3. Mobile Apps - Some events develop proprietary mobile applications that store digital wallets, enabling attendees to make payments via QR codes or NFC (Near Field Communication).
  4. QR Codes - Unique QR codes linked to a user's account or prepaid balance can be scanned for transactions.


Although cashless closed loop systems bring many benefits, they are not always one size fits all and one needs to carefully analyze pros and cons before deciding to implement such system:


PROS

  • Efficiency - Transactions are quick and reduce the need for handling cash, leading to shorter lines and faster service.
  • Cost of payment - Such systems significantly reduce cost of cash handling, including the security pitfalls and costs related to one. In addition, replacing standard card accepting payment with closed loop payment can lead to significant transaction fee reduction.
  • Security - Reduces the risk of theft or loss associated with carrying cash. Digital records of transactions provide accountability.
  • Data Collection - Organizers can track spending patterns, gaining valuable insights into attendee behavior and preferences.
  • Convenience - Users enjoy a seamless experience, often with the ability to top up their balance online or through mobile apps.
  • Budget Control - Users can load a fixed amount onto their card or wristband, helping them manage their spending.

 

CONS

  • Limited Use - Funds loaded onto the system can very often only be used within the event or venue, which may be inconvenient if not fully spent.
  • Technical Issues - System failures, connectivity problems, or device malfunctions can disrupt transactions and cause frustration.
  • Privacy Concerns - The collection of detailed spending data can raise privacy issues among users.
  • Initial Setup Costs - Implementing a closed loop system can sometime be costly for organizers, involving investment in technology and infrastructure.
  • Refund Policies - Attendees might face challenges or delays in getting refunds for unused balances.


Use Cases

  1. Music Festivals - Events like Coachella and Tomorrowland use RFID wristbands for entry, purchases, and even special experiences, enhancing security and efficiency.
  2. Amusement Parks - Parks such as Disney World use MagicBands, which serve as tickets, hotel room keys, and payment devices, streamlining the visitor experience.
  3. Corporate Campuses - Large companies use closed loop systems for cafeterias, vending machines, and on-site stores, promoting cashless transactions within the campus.
  4. Sports Venues - Stadiums and arenas employ these systems for concessions and merchandise, improving service speed and reducing cash handling.
  5. Cruise Ships - Cruise lines often provide guests with cards or wristbands linked to their accounts, used for all onboard purchases, from dining to excursions.
  6. Gaming - Introducing Cashless closed loop payments to gaming can provide end users with convinient wallet based system they can use for payments on multiple platform: physical e-sport events, gaming platform, in-game purchases and other.

 

Let's go deeper in to exploring potential use case and what are the benefits of such system being used. Let us take an gaming organization with e-sports event setup:


Consider a large gaming organization, providing services of on-line gaming distribution platform, and also organizing e-sports events around the world. Very significant aspect of such venue based event is the ability to ensure purchase of various gaming merch and food and drinks. Usually that would include for the organizer to partner localy with payment service provider, enabling short term lease of point of sale devices with card acceptance, incurring higher then usual transaction fees due to time limited nature of the event.


If we go in to the math, and consider that the event has 15000 attendees some rough calculation would look like this:

So the organization would pay 84.000,00 $ in card transaction fees for that event.

But if we translate that to cashless system, assuming that all top ups will be done by card we have the following situation, total fees for the initial top up:

15000x0,5$+15000x120x0,03$= 61.500$


So the saving on this conservative calculus i whopping 23.500$ per event. If we look at the 20 events yearly and even bigger events, it goes up to more than 500k $ of savings and more.

And if the organizer goes with our superb SaaS service for Cashless39, with QR based closed loop payments, cost per event would be less then 1000 $, making the case even more attractive!


So why wait, go cashless today!

 

Cashless closed loop payment systems provide a tailored solution for managing transactions in controlled environments, offering significant benefits in terms of efficiency, security, and data collection. However, they also come with limitations and must be carefully selected based on the business case.


As technology continues to advance, these systems are likely to become even more integrated and user-friendly, further enhancing the attendee experience in various events and venues.


Contact us today at sales@field39.com to learn more and discuss how to help you go cashless!

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