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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