Moderator Bunky Dunn of TourTech leads panelists Jeff Kreinik, Ticketfly; Kilay Reinfeld, Oasis Music Festival; Adam Richman, Electric Zoo; and Alex Paravicini, Rock in Rio, in a discussion on the cashless system at IMFCON.

REPORTING FROM SAN DIEGO — Nowadays, you can’t talk music festival without talking cashless payment systems. Panelists at the International Music Festival Conference in San Diego, Dec. 13-15, talked best practices from their own experiences making the switch to cashless.

While closed loop and open loop systems are available, the festivals represented by the panelists all used a closed loop system, often referred to as the top up method, that works much like a gift card in that you top up automatically or at a top up station to add money to your wristband. An open loop system attaches a credit card to the account and completes a new transaction for every time you tap.

“We encourage people to top up in advance by sending the wristbands to their houses,” said Adam Richman, festival director, Electric Zoo. “It’s pretty expensive.”

When they receive their wristbands in the mail, they can then go to the festival website to top up, and they receive an extra $5 for every $100 they put on in advance of the festival. Richman said they’ve seen about 60 percent of people take advantage of that early top up, which is pretty good. They also offer an auto top up option that allows them to set a trigger amount.

“The most common is that at $25 people choose to put another $50 on,” said Richman. “About 70 percent of users are choosing the auto top up feature.”

Rock in Rio came to the U.S. for the first time this year and implemented a cashless system, a first for the majority of the staff coming over from Brazil. On top of training the staff and vendors in the new system, Alex Paravicini, Ticketing and Operations, Rock in Rio, said educating the consumer was an important piece of the puzzle.

“The education piece is critical so your fans understand what’s happening,” said Paravicini. “We sent out a pamphlet of four steps to understanding cashless. At our will call area we have little postcards so people who didn’t go on our website and didn’t get theirs in the mail could understand what’s happening. We worked closely with our marketing team so they understood the process and communicate it on our website.”

Their RFID provider, Intellitix, in turn helped the marketing team out by sending them materials other festivals used to communicate the changes to their fans.

“For our marketing team coming into their first time with cashless, it gave them a better understanding of how to communicate with fans,” said Paravicini.

On the other side of that, Kilay Reinfeld, partner at Oasis Music Festival, switched from a token system to cashless just two weeks before the festival kicked off and didn’t have time to educate their fans beforehand.

“We didn’t do any of that and it was really a pain,” said Reinfeld. “We’re definitely going to do a lot more of the education part this year. It goes back to not fully understanding the process. We just jumped in and said we were going to do it and figure it out. But please, educate.”

Beyond being a new experience for the festivalgoer, it can also be a change for the vendors as well. Whereas with a cash and card system the vendor gets all the money and then pays the festival its commission, the script is flipped with cashless.

“The onsite process is working with all the vendors to set them up with the cashless system and training them how to use it,” said Richman. “It takes a lot of IT, and it’s a lot of extra work but on the revenue side it’s paying off. It’s something that’s a full-time job on the promoter’s side, which isn’t the case when working with regular cash and card.”

The cashless system does make for faster transaction times and quicker-moving lines that vendors then have to keep up with. Richman said they are seeing a 25- to 30-percent increase in per caps with the cashless system at their festivals. It is important, Paravicini said, for the vendor to realize they won’t get their cut sometimes until 24-48 hours after the end of the festival and to make sure they see that in the contract.

“The biggest hurdle for us has been tipping or gratuity,” said Richman. “None of the cashless systems that we work with really support gratuity in an organic or natural way, so that’s complicated things. Obviously, we all know how a bartender gets paid and how that business model works. Well now that’s changed a little bit where our concessionaire has to offer a higher wage per hour than they normally would have because they can’t get tips.”

In addition to an increase in per caps, Richman said they’re seeing revenue come in from the currency exchange system cashless allows them to implement.

“Every festival has its own currency,” said Richman. “Tomorrow World has Tomorrow World Pearls, Electric Zoo has Easy Bucks and so on. Everything at the festivals is priced with that currency. It kind of manipulates the pricing a little bit and makes things seem cheaper, so we’ve seen some success with that. It also allows us to add a little on top of the vendors prices, which really makes cashless worth it. All of the sudden consumers are paying $7.77 per beer, and we’re only paying the vendor out $7, so we get $0.77. That’s where we’re seeing the biggest gain on cashless.”

They also charge a $5 refund fee for users who want to get back the money they loaded onto their wristbands but didn’t use. Sometimes people don’t even bother, and that money stays with the festival. Richman said they haven’t had too much pushback about the refund fee, but have seen some pushback from the currency exchange rate.

All the extra revenue helps with the cost of installing a cashless system and with all the layers involved, from marketing costs, increased staffing and added infrastructure.

“Definitely do the research into all aspects of it,” said Reinfeld. “We went into it thinking it’s pretty straightforward, but from the promoter side there’s a lot of work that goes into it before, during and after the festival.”