Digital Payments

Why Contactless Payments Are This Summer’s Big Music Headliner

Cruise ships and musical festivals are not that different from each other, not these days. Both feature large crowds of generally like-minded people. Not only that, but aging and even younger rockers and other musicians are often featured on special cruises for serious fans — that includes groups that range from baby boomer favorites to extremely loud metal groups.

However, when it comes to payments and commerce, perhaps the main similarity is this: the use of radio-frequency identification (RFID) technology to enable purchases and transactions. In an new PYMNTS interview, Front Gate Tickets President Maura Gibson talks about how RFID wristbands can change the music festival experience, and what’s coming next as more venues and promotors try to get cash out of the festival equation.

“It’s similar to the cruise line model,” she said.

Summer, of course, is the peak season for music festivals — a crowded field that, in an annual exercise, many music industry observers keep predicting will decline, given all the competition for consumers’ dollars and time (music festivals are often a multi-day commitment, after all, and often require significant travel for many fans). “Every year, we go, ‘When is the bubble going to burst?’ and every year we have new records” for festival attendance, spending and other metrics of success, Gibson told PYMNTS.

When it comes to that success, RFID technology is pulling ever more weight. RFID-enabled wristbands are being used for tickets and cashless accounts that festival-goers use to buy food, beverages, souvenirs and other retail items. Those wristbands also enable sponsors and brands to collect a wealth of consumer data from festival-goers without having to ask them to write down emails and other information — and those brands and sponsors can offer consumer experiences via those wristbands (such as fun or wacky events that take place at some festivals).

While mobile phones can do those jobs, they have their drawbacks. For one, they are relatively bulky, unlike wristbands, which speak to the convenience factor. As Gibson also pointed out, smartphones still have a limited battery life, which means that, after 12 hours, they might conk out if not charged — festival-goers must either bring portable chargers or waste time at charging stations.

RFID wristbands do have some challenges to overcome. The main one, according to Gibson, might be that the RFID “technology is not inexpensive.” Indeed, that often requires the intervention of festival sponsors to help subsidize that cost in exchange for consumer data or other benefits. “You have to offset it some way,” she said.

In a broader sense, RFID technology, while hardly new, is taking on many new activities when it comes to payments and commerce, and not just for music festivals and other concerts. Those activities include inventory management — most notably for apparel retailers, at least according to current trends.

In addition, activity and competition are heating up to get more festivals and venues to adopt RFID technology. Part of the motivation behind that is akin to the motivation fueling other contactless payment efforts in other areas of commerce: to leave cash behind. Cash can be especially troublesome in the music festival environment, where it becomes soggy and crumbled, and can lead to longer lines for beer, hot dogs and other vital items.

Besides that, the replacement of cash by RFID wristbands serves to reduce fraud, Gibson said. Consumers seem to be totally on board. “Those who register” for such wristbands, she said, “have an almost 100 percent opt-in rate for cashless.” Of course, many consumers end up losing their RFID wristbands, but as Gibson told it, the devices are protected by PINs unique to each festival-goer, providing ample security.

So, what’s next as the summer festival season rages on? Gibson said peer-to-peer (P2P) transactions are part of the next wave of development in the area. In fact, she said there are now two “beta” tests of P2P this summer, and that lessons learned from those efforts will guide future work in that area. As PYMNTS readers likely know, P2P is a fast-growing part of contactless payments, and tends to appeal to younger consumers, including those likely to attend music festivals.

Those events are still mainly about the music, of course. However, as we see, some of the coming advances and developments in contactless payments are likely to keep coming from those large gatherings.



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