Cashless: cost and benefits – making the right choice for your event

Cashless: cost and benefits – making the right choice for your event

Beyond per­son­al views, before launch­ing a cash­less project it is impor­tant to run an analy­sis and mea­sure the val­ue of the project. Run­ning a cost-ben­e­fit analy­sis allows to have a sense of the impact of such a project before mak­ing a deci­sion, but also to assess the out­come after imple­men­ta­tion and there­fore check if the pre­vi­ous­ly set goals have been reached. As you can imag­ine, per­form­ing this analy­sis before­hand is crit­i­cal, but run­ning it at the end of the event — as well as year­ly — will also prove very ben­e­fi­cial.

Each organ­i­sa­tion, each cash­less project is unique, how­ev­er we have iden­ti­fied a num­ber of recur­ring ele­ments impact­ed by the intro­duc­tion of such a sys­tem. It is up to each pro­mot­er to assess them in light of the speci­fici­ties of their own event. Some indi­ca­tors can be mea­sured such as increase in the aver­age shop­ping cart, oth­ers less so, such as cus­tomer sat­is­fac­tion. We have run analy­ses using data col­lect­ed from 200 events over the past 3 years.

This analy­sis shows a prof­itabil­i­ty increase rang­ing between x1.5 and x3.

COSTS

We have iden­ti­fied three main sources of expens­es that can be mea­sured and tracked. We have oth­er­wise list­ed three indi­rect expens­es you may need to take into account, depend­ing on your organ­i­sa­tion.

1. TECHNICAL SOLUTION

On aver­age, this rep­re­sents 5% of on-site rev­enue.

The solu­tion cost includes the soft­ware, project man­age­ment, device rental, the field­work team, etc.

2. NFC DEVICE

On aver­age, each NFC device will cost between £0.40 and £1 (depend­ing on vol­ume and type of device). The choice of the type of device rests with the organ­i­sa­tion (a top­ic we will address lat­er on this blog). The card remains the cheap­est solu­tion, par­tic­u­lar­ly for low order num­bers. It is gen­er­al­ly advised to order enough NFC devices to pro­vi­sion for 60% of the audi­ence. Opt­ing for the wrist­band allows to com­bine cash­less pay­ment sys­tem and access con­trol in one device per attendee.

3. INDIRECT COSTS

Some indi­rect costs should be con­sid­ered for a thor­ough analy­sis:

  • Pro­cess­ing fees (collection/refunds): These fees are evi­dent­ly high­ly cor­re­lat­ed to the share of online top-ups. How­ev­er, online col­lec­tion fees are most­ly replac­ing those of tra­di­tion­al pay­ment ter­mi­nal fees.
  • Cost of the bank­ing kiosks on site: If the event man­ag­er had not already imple­ment­ed a token sys­tem, this new sys­tem rep­re­sents new human and oper­a­tional expens­es to take into account. This cost is inverse­ly relat­ed to the share of online top-ups (before and dur­ing the event). Some event man­agers man­age to exceed a 60% share of online top-ups, which tends to reduce by that much the costs relat­ed to the imple­men­ta­tion of the phys­i­cal top-up kiosks.
  • Cost of imple­ment­ing net­work cov­er­age: It is con­ve­nient to make Inter­net net­work avail­able on the entire loca­tion, par­tic­u­lar­ly to be able to track the activ­i­ty in real time and to allow for online top-ups through­out the event. This expense can there­fore be per­ceived as an invest­ment lead­ing to a larg­er vol­ume of online top-ups, and thus a smoother cash­less expe­ri­ence.

BENEFITS

We have iden­ti­fied four main ben­e­fits that we can effec­tive­ly and con­sis­tent­ly mea­sure. Fur­ther­more, we have list­ed some indi­rect ben­e­fits that could be inter­est­ing to con­sid­er for a thor­ough analy­sis.

1. REVENUE INCREASE

On aver­age, we have seen a 5% rev­enue increase.

Cash­less sets a favourable land­scape for pur­chase: online top-up (few­er stops at the bank), decrease in the time to order (instant trans­ac­tion, no more maths to be done by the staff), less fraud… Con­ser­v­a­tive­ly we have retained a 5% rate. How­ev­er, some fes­ti­vals have report­ed that their aver­age dai­ly shop­ping cart had increased by over 20%.

This met­ric remains dif­fi­cult to mea­sure con­sid­er­ing the high num­ber of exter­nal fac­tors chang­ing year on year: weath­er, line-up, change in prices, etc.

2. OUTSTANDING BALANCE

On aver­age, this rep­re­sents 6% of the rev­enue, i.e. £2 per attendee

Unlike most token sys­tems, cash­less allows to refund any out­stand­ing bal­ance which is very con­ve­nient for the users, who in turn have few­er hes­i­ta­tion to top-up. At the close of the gates, this amount can rep­re­sent up to 25% of the event’s rev­enue; and at the end of the refund peri­od it amounts to around 6% as some users do not make any request for a refund or choose to donate the remain­ing bal­ance to the event man­agers to help them devel­op the event. It should be not­ed that this per­cent­age is three times the usu­al remain­ing amount in a token sys­tem where, due to a lack of refund sys­tem, pur­chase of cred­it is much more cal­cu­lat­ed and thought about.

3. POLICY ON FEES

On aver­age, this rep­re­sents 2% of rev­enue.

Beyond the obvi­ous ben­e­fits, man­agers have the oppor­tu­ni­ty to apply a fee pol­i­cy for the pub­lic to con­tribute to financ­ing the sys­tem, sim­i­lar­ly to a deposit on cups/Ecocups for instance. Effec­tive­ly, 90% of events apply fees on the sale of devices or account acti­va­tion. These fees are usu­al­ly set at £1.

4. INDIRECT BENEFITS

List of indi­rect ben­e­fits or pos­i­tive impacts for a thor­ough analy­sis:

  • Decrease in fraud: It is one of the indi­rect finan­cial gains relat­ed to the imple­men­ta­tion of a cash­less sys­tem. Using cash requires high­er secu­ri­ty mea­sures to lim­it loss­es and/or theft. Exam­ple of fraud­u­lent sce­nario: hand­ing back high­er amount of cash/tokens with the help of an accom­plice among the audi­ence. Addi­tion­al­ly, the cash has to be kept safe, with one cen­tral loca­tion requir­ing pro­tec­tion on site and a cus­tomised track­ing of trans­ac­tions.
  • Reduced leak­age: Organ­i­sa­tions have report­ed a bet­ter loss-pur­chase ratio. Con­ser­v­a­tive­ly we have indi­cat­ed here a 1% impact on rev­enue. This phe­nom­e­non is part­ly explained by the account­abil­i­ty of each bar­tender, who now have to input each order in a point of sale sys­tem. Some events leave the option for bar­tenders to offer drinks should they wish to do so by swip­ing their ven­dor card. Out­come: bad habits are becom­ing few and far between.
  • Dis­play of spon­sors on the new device: The device pro­vides a loca­tion to sell to spon­sors. Fur­ther­more, cash­less is strong­ly linked to alter­na­tive and inno­v­a­tive pay­ment meth­ods, which is attrac­tive to tra­di­tion­al bank­ing part­ners or more dis­rup­tive play­ers (Pay­Pal, PayLib, Lyt­Pay, etc.) but also to mobile oper­a­tors and mil­lenial-type brands (Deez­er, Spo­ti­fy, BlaBlacar…) who are much more inter­est­ed in brand aware­ness cam­paigns.
  • Flex­i­ble price pol­i­cy: It is pos­si­ble to increase a price, by £0.10 for instance, to track increase in sales because the issue of change (in cash or tokens) is gone.
  • Cre­ation of a list of qual­i­fied con­tacts: In reg­is­ter­ing atten­dees in its cash­less sys­tem, the event man­ag­er col­lects con­tact infor­ma­tion (email, phone num­ber, etc.) allow­ing for sub­se­quent per­son­al­ized com­mu­ni­ca­tions. In becom­ing a user of its cash­less sys­tem, the event man­ag­er can now com­mu­ni­cate direct­ly with the attendee.
  • Expan­sion of the spon­sor­ing offers with new pos­si­bil­i­ties to cre­ate aware­ness pre‑, dur­ing, and post-event: Cash­less is the most used indi­vid­ual ser­vice at the event with up to 70% of users, but it remains under­used to this day as a mes­sag­ing plat­form for the event man­agers and their spon­sors. The event’s mobile app, by com­par­i­son, reach­es few­er peo­ple.
  • Dis­ap­pear­ance of some tra­di­tion­al expens­es: Some fees are includ­ed in the cash­less sys­tem, such as online bank­ing fees instead of pay­ment ter­mi­nal fees on loca­tion, or switch­ing from tra­di­tion­al wrist­bands to NFC. Secu­ri­ty fees decrease with the need for CIT secu­ri­ty staff being cut some­times by a fac­tor of 10.

To go fur­ther and know every­thing about cash­less, down­load our white paper here:

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Cashless — much more than a payment solution

Payment is but a small part of the possible uses that “cashless” enables. Its main interest lays in building a complete eco-system. Integrating cashless to your event requires involvement of your entire organization, it enables you to not only manage your organisation but also develop new areas such as access control, management of specific audiences and partner activations for a richer user-experience.

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