Music festivals are making more money by ditching cash

Hands up, wallets out.
Hands up, wallets out.
Image: Hamish Smith via Flickr; licensed under CC-BY-2.0
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This past weekend in Hong Kong, over 60,000 people attended the Clockenflap Music Festival, a three-day event featuring live musicians from around the world. Tickets cost anywhere from HK$980 to HK$1,940 (US$126 to US$250), and could be purchased with cash at the door.

Inside the venue, however, all the buying and selling happened without cash. Concertgoers were given top-up wristbands they filled with money at “add-value” stations. To make purchases—beer, food, merchandise—they tapped a small payment terminal at vendor stalls.

“It’s pretty convenient,” said Mahieu Furlan, a 39-year-old architect at the festival. “You don’t have to fiddle with cash, you can just put your wrist up to the machine.” Furlan had spent HK$400 over the course of two days using the wristband, which contains a radio-frequency identification (RFID) chip that works much like the card keys that unlock hotel rooms.

Playpass’s RFDI wristbands can be used to make purchases, or barr access to VIP areas
Playpass’s RFDI wristbands can be used to make purchases, or barr access to VIP areas
Image: Playpass

Clockenflap, which hired Belgium-based Playpass to handle the payment system, is one of many music festivals to go cashless. Lollapalooza, Coachella, and the Electronic Daisy Festival have each introduced some form of tap-enabled payments in recent years. Such outdoor, multi-day events—which let attendees see several acts in a short piece of time—are a growing force in the industry.

And that industry is significant. According to PriceWaterhouse Coopers, revenue from ticket sales for live music events worldwide hit $20.5 billion in 2014, and is expected to reach $23.7 billion by 2019. Live music festivals make up an increasing portion of that segment—music trade publication Pollstar says that more than 1,500 were held around the world this year, which “would not have been possible just a few years ago.” Revenues are promising, too—the top five festivals in the US collectively raked in $184 million in ticket sales last year.

But as with movie theaters, the real margins for festival organizers are not in entry tickets, but in food, beverages, and merchandise. Cashless payment systems, according to proponents, cut down on lines, reduce security costs, and boost revenue. (Another selling point: Sales commissions are easier to track and distribute.) When dance festival organizer SFX implemented cashless payments in 2014, the company said its vendor sales were twice as high as comparable festivals.

Hill believes the key is not in the cashless concept itself, but in how festivals use it. This year Clockenflap instituted a refund system, wherein festival goers can apply to receive unspent cash leftover on their wristband days after the event. He expects that by guaranteeing refunds, sales will increase.

“If you need to go top up your card to buy a beer, that takes more effort [than to just use cash]. But on the other hand, by guaranteeing refunds, you’re going to put more money on your cards. So they balance out,” he tells Quartz. “That’s one of the reasons we were so keen to provide 100% refunds [on unspent cash].”

Of course, an even sweeter source of revenue might come from amassing unspent and non-refunded money—which is not improbable, given the inebriated state of some festival goers. “It’s super easy,” one merchandise vendor told Quartz. “People just get drunk and forget about their money.”