For example, an arcade that is looking at ticket in/ticket out as an option is also looking at a potentially expensive upgrade to every machine in the venue; the sensible option, therefore, would be to consider such a choice when your games are due for overhaul or replacement, says Paul Rodgers, chairman of Vendorcom, a trade body for the cards and payments industry. After all, when you’re speaking to machine suppliers, you can specify what you want the machine to do in terms of payment acceptance, even down to the bill validator provider they use; most vendors will bend over backwards to keep a customer.

Says Rodgers: “That replacement cycle is the real cut-off point, the watershed. If a business is going to go cashless, it all needs to be done at once, because to have partial cash and partial cashless payment options will create a mixed message for customers. Some amusements are of course actually coin-based, and if you want to maintain that physicality of coins there is no getting away from it; but you can have coin dispensers you put a card into and get coins that way, for example, so you’re still fundamentally cashless.”

The key for many operators is, then, whether it is financially viable to go down the cashless route. Assessing this means digesting many factors to do with cash handling, as Rodgers explains – and speaking to your insurer is a good measure of what you might save in the long run, too: “As to whether it’s cost-effective to do so, I think it’s a case of benchmarking against those who operate a cashless situation; the key factors will be things like putting an estimate on the risk you face by having cash around. Insurance companies are often the best guides for that, so get a quote based on what your current premium is based on cash loss by theft, compared to going cashless, and taking out some of the weaker links in the chain of cash handling.

“The advantage of having a partially cashless venue is probably limited because your existing security mechanisms will have to remain – the fixed costs of handling cash are quite a large proportion of the overall cost, so until it is taken out completely, you won’t know what you can save. For example, even with contactless payments on the high street, even if cash were reduced to 20 percent of its current usage, the infrastructure around managing cash would still be there – cash machines, security transports, banks, all of those would still exist and so would the associated costs, even if 80 percent of transactions involved no cash at all. Understanding the fixed costs of cash is crucial to the decision.”

The customer perspective

A cashless environment is relatively easy for a customer to accept, particularly those in cities where the transport system, for example, has already switched or partially switched to cashless, asLondonhas with the Oyster card. Indeed, there are lessons all businesses can learn from the Oyster card, which has been successful not just because it is convenient to use it instead of queueing for tickets, but because it enables price reductions. Oyster is cheaper to administer than a paper-based ticketing system, so paper tickets have been made more expensive for travellers to buy.

Similarly, in the amusements sector, incentivising patrons with added value as well as greater convenience while they’re playing is a win-win situation. Offering a £10 credit for signing up for your pre-paid card, for example, or a free cup of coffee with every visit for cardholders, does not cost the vendor a great deal in financial terms but it means a lot to a player, and has the potential to increase customer loyalty.

Issuing your own cards to players means one payment location, a cash desk in the venue, which can also be used to cash out. Most venues would opt for a closed-loop card model, where the card can only be used in that venue or in properties owned by that chain; an open loop involves a payment or card system accepted by other vendors, which realistically means Visa or MasterCard pre-paid cards. Not impossible, but also not as sexy when you think about player loyalty and return visits.

However, one issue that signing up for a card might bring up is that of anonymity – many people do not like the idea of their movements being trackable, or even adding yet another card to an already-bulging wallet or purse. Are your customers ready to give their details and sign up for a card, or is the best approach one that preserves anonymity, as retailers’ gift cards do?

Vendorcom’s Rodgers reasons through the pros and cons: “It could be an obstacle, that’s certainly the case when you look at open-loop pre-paid being used in any form, whether contact or contactless. For me, a cashless situation works best in a contactless scenario with low-value payments. [But although it is not contactless] a completely anonymous card – which would work exactly like a gift card in a high-street shop – would work in that situation rather well. This would be relatively cheap to implement because most gift cards only have magnetic stripes, there’s no chip and they certainly don’t have any of the RFID technology that makes contactless possible.”

However, he adds, although “those [RFID-enabled] cards are more expensive to produce, they’re more durable and secure than a simple mag-stripe card. If someone is reusing a card over and over to add money, investing in that extra technology makes sense. With that investment, if RFID were involved it brings contactless technology and increased convenience for the user. In the leisure industry, that convenience will outweigh anything else. A venue could just install swipe readers for players to use, it would be relatively quick, but contactless is probably the way forward.”

Return on investment

Durable and scalable technology is out there now, and it works. The question comes back to affordability. With widespread adoption of contactless, the cost of hardware is coming down, but will it pay for itself in your venue? The answer is more than likely yes. This is because psychologically, paying with a contactless card means the user is not seeing pounds and pence; although the card has been paid for with cash, to many people it ceases to be seen as currency.

Rodgers explains: “If you change currency – for example, at a theme park or funfair – and pre-pay for tokens, when you’re actually queuing for the ride and handing over your tokens or tickets, you’re not thinking ‘wow that’s just cost me five pounds’ – it’s lost its relative value to you in a way, you’re handing over a bit of paper. It’s the same mindset that kicks in when people are operating in a cashless environment. Cruise ships have made a huge, huge success of pre-paid cashless environments; the tour operator might give you a card with, say, a couple of hundred pounds on it, and you reload it and go on a mad spending spree.”

 A mobile future?

Then, of course, there’s mobile technology, which is likely to trump all existing methods of cashless payment in the next few years. The reasons are simple – the customer feels in control, they already own the payment technology (their handset), and there’s nothing extra to sign up for.

The growth of the smartphone means mobile payment technology is likely to thrive. It’s been around for some time already, but it’s only recently that manufacturers in cash handling have been looking to apply it to gaming – JCM recently showed a potential new mobile payment technology, turning the mobile phone into a wallet for a form of contactless pay, at the Global Gaming Expo in Las Vegas.

The benefits of the mobile phone as a form of payment go way beyond simply being convenient, though, as Rodgers says: “Cards as a form factor for payment are certainly not dead, just as neither cash nor cheques are dead, as some have claimed; there is life for all of these things, but the dynamics for payment are moving toward mobile commerce in all sorts of ways. It’s not just using your mobile as a wallet, or like a contactless card – you’re also able to engage through apps or through a mobile Website for purchases as well, so there’s lots of ways to use them for payment.

“Tap-and-go payment, though, is very real. Within the context we’re talking about here, contactless-style cards I think will be one of the shortest-lived technologies in the cards and payments industry; I think we will see that consumer process moving to the mobile phone using near field communication [NFC] technology very, very quickly.”

It also has another benefit – from the customer’s side of the fence, at least. Mobile payments mean the customer always has access to details of how much they have spent, quickly and easily, unlike a pre-paid card where they might have to check at a desk or kiosk.

Observes Rodgers: “Regarding the psychological effect of not ‘spending’ cash when you’re using a pre-paid card in a leisure environment, I think when you start to move toward a mobile-based wallet, because the user will be able to see pounds and pence on their phone, it brings the user back to knowing they are using real currency, so the increased spend we sometimes see with pre-paid might diminish a little.” On the other hand, the player will also feel more in control, which might influence future repeat visits.

Unless you’re prepared to fully commit to cashless, your savings might be negligible. But the commitment may bring other benefits, like a new customer base lured in by the facility for cashless payment: teenagers. Rodgers elaborates: “I’m not convinced that a demographic would change markedly if a venue went cashless – though being more technologically switched-on might make a venue more appealing to teenagers who typically carry less cash anyway, particularly if you went to a mobile NFC environment. A vendor might be able to move into a younger demographic.”

Cash, however, is simply not dead, and there’s absolutely nothing wrong with a cash-based setup, as long as you have staff you can trust and systems in place to keep everything secure and running well. We’ll leave the last word to Ron Delnevo, managing director of Bank Machine and a director of industry body the Payments Council, who told Euroslot: “A cashless slot machine is like a broken pencil: pointless. The jangle of a big win is fundamental to the atmosphere of a slot machine environment.

“But as well as bringing a crucial element of excitement to arcades and FECs, cash encourages responsible gaming, as players can tangibly see and feel how much they’re spending and budget accordingly. Cash is absolutely fundamental to a vibrant and at the same time responsible gaming sector.”

Printer friendly version

Email this article to a friend

Bookmark this

---