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©2012 BTD GROUP
19.06.2012 Whitepaper Cashless Payment Version 1.0
1
CASHLESS PAYMENT & RFID in the sports industry
Status Quo and Future Development
Whitepaper
19.06.2012
Version 1.0
©2012 BTD GROUP
19.06.2012 Whitepaper Cashless Payment Version 1.0
2
Index
1 Whitepaper - CASHLESS PAYMENT & RFID in the sports industry ................ 3
2 Current Situation – Value of Cashless Payment ........................................ 3
3 Cashless Payment in Sports environment ................................................ 5
3.1 Technical overview ............................................................................ 7
3.2 “Different faces” of cashless payment ................................................. 11
3.3 Critical requirements and parameters regarding cashless payment ......... 15
3.4 Financial aspects of cashless payment system ..................................... 17
3.5 General benefits of a contactless RFID cashless payment system...........20
4 Case Studies / Success Stories .............................................................. 23
4.1 Allianz Arena / Weser Stadion - implementation of cashless payment &
other technologies within a stadium environment....................................... 23
5 Hidden & Underestimated Potentials and Future Trends ............................ 25
5.1 Hidden & Underestimated Potentials ................................................... 25
5.2 Future Trends .................................................................................. 27
6 Risks and Challenges ............................................................................ 30
6.1 Technological Risks........................................................................... 31
6.2 Financial Risks ................................................................................. 32
6.3 Project challenges ............................................................................ 32
7 Conclusions - Role of BTD ..................................................................... 34
©2012 BTD GROUP
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1 Whitepaper - CASHLESS
PAYMENT & RFID in the sports
industry
Over the last decade the concept of a cashless payment system and other
solutions based on RFID technology (e.g. access control, ticketing, accreditation,
registration system, etc.) have become an integral part of a stadium and arena
environment. Nevertheless, despite its broad acceptance and advantages
numerous leagues and clubs are still hesitant to introduce such a system. This
research conducted by BTD offers an overview to consider the current status and
future trends a cashless payment system entails for sport clubs, leagues, major
tournaments and venue operators. With additional information regarding detailed
system descriptions, successful case studies, identification of potential risks and
underestimated potentials, the decision-makers are helped to prepare or
evaluate their plans and strategies concerning the potential introduction of a
cashless payment system.
If you need any further information or you would like to discuss the content of
this Whitepaper with us please contact whitepaper@btd.de.
2 Current Situation – Value of
Cashless Payment
A current study ”World Payments Report 2011“ carried out by renowned
companies Capgemini and The Royal Bank of Scotland (RBS) revealed a trend to
show a global growth of non-cash payments which went up by 6.8% (per year)
between the periods 2001-09 and in 2010 by a further 7.8%. This research also
predicts that the volume of non-cash payments transactions will rise in future
years from 14% to a staggering 37% in some regions of the world.1
1 WRP, 2011, P. 4
©2012 BTD GROUP
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Number of Non-Cash Transactions by Region (Billion), 2001, 2007-20092
The USA is currently the largest non-cash payments market in the world. A study
produced by the Federal Reserve System titled, “2010 Federal Reserve Payments
Study” disclosed that the usage of debit cards in the US increased from 2006 to
2009 by 14.8% and by 21.5% for prepaid cards (in the same time-period). This
significant increase of transactions with debit and credit cards amounted to a
total of 15.6 billion3 in the US market.
In spite of the worldwide rise of cashless payments, the percentage of cash
handling especially for lower amounts (under 25 $) is still fairly high even within
mature economies such as the US, UK, Canada, Germany and Australia. As an
example, the payment behavior in Australia (2011) which is similar to other
developed economies, is displayed in the following chart showing that cash is still
the most frequent payment method depending on the actual amount and point
of purchase4
2 Capgemini, RBS, EFMA, „World Payments Report 2011“, P. 9
3 The 2010 Federal Reserve Payments Study, 2011, P.11
4 Capgemini, RBS, EFMA, „World Payments Report 2011“, P. 20-21, FirstData,
Market Brief “Consumer Payment Preferences for In-Store Purchases”, P. 3 ff.;
Reserve Bank of Australia, “Cash Use in Australia: New Survey Evidence”, 2011;
Payment history in Germany (orig. Zahlungsverhalten in Deutschland), Deutsche
Bundesbank, 2009, P. 50 ff.
©2012 BTD GROUP
19.06.2012 Whitepaper Cashless Payment Version 1.0
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Payment methods by payment size in Australia5
3 Cashless Payment in Sports
environment
In Germany, the first cashless solution was implemented by the VELTINS Arena
in 2001. In the German stadium and arena sector, the cashless payment system
is primarily based on contactless RFID technology which has become ever more
popular. Currently there are 13 stadiums and multifunctional arenas in
Germany’s 1. Bundesliga which have or are already in planning to install such a
solution.6 Moreover, 6 of 8 of the European Championship 2012 venues in
Ukraine and Poland provide contactless payment solutions for spectators.7
5 Reserve Bank of Australia (www.rba.gov.au), “Cash Use in Australia: New
Survey Evidence”, 2011
6 Stadionwelt, Zugang/Ticketing & Bezahlsysteme, 2011, P. 32
7 www.polishguide2012.pl, Polymath Consulting, The Cashless Stadium/Events,
October 2011
©2012 BTD GROUP
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Multifunctional concept8
The presence of cashless payment solutions in major European leagues, with
some exception is still nevertheless in the very early stages.
Specifically from the viewpoint of top sport clubs, venues, operational companies
or major sport and leisure events, it is beneficial to implement a solution like the
cashless payment system integrated within a multifunctional conception. The
goals are to significantly enhance the fan experience and to leverage business
potentials through smart technology solutions.
By now there are several sophisticated RFID-orientated implementations on the
sports and leisure market. For instance, the famous motorsports complex, the
“Nurburgring” in the German Eifel region is completely operated on the basis of
an RFID card. The visitor is not only able to carry out payments anywhere
onsite, but also to use the card as an entrance medium to the different
attractions including the race course, concessions and funpark.9
In the stadium environment there are two examples which illustrate the success
and potential an RFID and cashless payment system has. These are the Allianz
Arena, home to Bayern Munich & 1860 Munich as well as the Weser Stadion,
home to Werder Bremen which are further detailed in the case studies in
Chapter 4. A multifunctional cashless payment concept does not only apply to a
8 Source: www.security-technologynews.com
9 www.nuerburgring.de
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single club or a venue, but additionally as a potential centralized solution where
for example, a domestic football league could consider. In Holland and Belgium
for example, both leagues already offer a centralized FanCard System and as a
result, a multifunctional cashless payment concept could be seamlessly
integrated in similar way. A leagues demands naturally require more
sophisticated solutions than ones for a single sport site.
This complex conceptual design of a centralized solution however contains
various aspects outwith the framework of this whitepaper but require intensive
research in order to come to a sound judgment and visualization of what is
expected: several important factors include the liaising with stakeholders,
technical design, legal requirements, broad marketing implication, public image,
social factors, etc.
There has been a surge of technological developments during the last decade
with the introduction of new business models based on RFID, barcode, NFC
(Near Field Communication), the development of e-payment brands (e.g.
PayPass, Google Wallet, ISIS, SEQR, LevelUp) in the cashless payment market
as well as the establishment of innovative multifunctional concepts e.g. as seen
in the Asian market for public transportation, loyalty, payment etc. The
improvements specifically of NFC technology and mobile applications open a new
perspective not only for stadiums and arenas but also for the overall markets.
For instance, replacing or amending a card based solution by a mobile phone
based solution offers an extended and efficient multifunctional concept for
venues and clubs which might be integrating with functionalities such as
payment, ticketing, apps, loyalty, social media channels etc. on just one
medium.
3.1 Technical overview
A cashless payment system is designed and installed in stadia to enhance a
visitor’s convenience, whilst ideally generating profits for the clubs. Primarily,
the system aims to eliminate the notion of fans and visitors paying for food,
drinks or merchandise with “slower payment possibilities” like cash and instead
use for example, RFID cards. Spectators are able to obtain and top up the
payment cards onsite from either/both automatic dispensers and/or person
operated selling points. Alongside, in many instances venue visitors might
charge their cards via online tolls like web-top-up or automatic top-up as well as
preload the season or membership cards. So called “open-loop systems” operate
©2012 BTD GROUP
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on the principle of contactless credit or debit card issued by partner banks of the
clubs or venues. In contrast, cards for “closed-loop systems” might be provided
and circulated simply by the club, venue or event operator.
Stationary card top-up example10 Mobile card top-up example11
The cashless concept is becoming increasingly popular amongst major modern
stadia and other sports venues because of its ability to speed up the sales
process in a short period of time whilst monitoring the tendencies of the
customers.
The term “RFID” refers to "Radio Frequency Identification". RFID technology
allows contactless transmitting of different data between a RFID tag and
compliant reader device. Inside of a tag, an RFID chip is embedded and is able
to store a large array of diverse information, which can be securely coded. For
this reason, the RFID based technology is deployed to various applications in
many industrial and business sectors. The most common field of RFID appliance
exists in automatic identification and tracking, however there are also some
further means which RFID is used. RFID chips can be found in several card types
or other transponders allowing payment processes for common goods at
supermarket, highway fees or city transportation tickets. There is however,
considerably more functionalities RFID may provide - RFID installations may be
found in public transportation ticketing systems, comprehensive access, ticketing
and accreditation solutions, item registrations systems, identity check, passport,
time registration and many more. With this in mind, it is clear that RFID
possesses enormous flexibility, adaptability and expandability.
10 www.stadionwelt-business.de
11 www.geldkarte.de
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Considering the above mentioned multifunctional character of the RFID, many
companies already offer contactless payment possibilities or extensive solutions
and services on the basis of this technology. For example, MasterCard have
rolled out their contactless smart card system “PayPass” in 37 countries in terms
of testing and launching. In 13 countries the customers can already officially pay
at more than 311,000 (March 2011) merchant locations. 12 VISA has been
analogically testing and implementing “payWave” in several countries
worldwide.13 A really impressive multifunctional RFID based concept, called
“Octopus”, has already been launched 1997 in Hong Kong. Stating as the
transportation card Octopus has successfully grown and improves continuously,
gradually extending the integration of functionalities like contactless payment
with huge amount of acceptance points, access control, registration, reward
system and many other schemes.14
15 16 17
Logo PayPass Logo payWave Octopus Card
Other remarkable and comprehensive RFID installations in the Asian Region for a
long period are e.g. “T-money” in South Korea, “EasyCard” in Taiwan, both
based on Mifare technology, “Suica” in Japan or “EZ-Link Card” in Singapore,
both provided with the FeliCa chip.1819
12www.paypass.com
13www.visaeurope.com
14www.octopus.com.hk
15www.paypass.com
16www.visa.ca
17www.octopus.com.hk
18www.eng.koreasmartcard.com, www.easycard.com.tw, www.jreast.co.jp,
www.ezlink.com.sg
©2012 BTD GROUP
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NFC technology
NFC is often used synonymous with RFID though there are clear differentiators
from a technical point of view. Near Field Communication (NFC) is a subset of
RFID, which allows a communication channel up to 4 centimeters distance with a
13.56-MHz frequency. Primarily this short range of interface creates a safe
connection line between the communicating devices.20 NFC is usually used in
environments that require higher security standards (such as payment) and is
therefore used in nearly all short range payment solutions as already listed
before.
NFC Modes21
A further advantage from NFC is its compatibility with several contactless chip
standards which presently exist on the market such as mifare, FeliCa, LEGIC,
etc. and the extension of multifunctional capabilities, making NFC a flexible tool
for positive customer experience.
NFC technology can be adopted in three different ways, with each holding a
specific benefit.
19Martin Retzmann, SmartCards in Far East (orig. SmartCards in Fernost), 2011
at www.innovationskongress-bw.de
20www.nfc-forum.org
21www.nfc-forum.org
©2012 BTD GROUP
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NFC Card Emulation Mode: Mobile devices are able to support several NFC
applications in this mode including payment, registration and unlocking of
security mechanisms, access, etc.
Peer-to-Peer-Mode: This mode enables an activating of communication channels
and data exchange between NFC capable devices as of two mobile phones. This
may include business cards, coupons, money transfers and others.
Reader/Writer Mode: Reader/writer mode provides an ability to read information
stored on NFC tags or to write data on NFC tags respectively. For example,
information on a NFC tag integrated in a smart poster can be read by a NFC
smartphone.22
3.2 “Different faces” of cashless payment
Currently, there is a variety of cashless payment RFID-mediums circulating the
market which differ in their technical characteristics as well as in their areas of
application. The technological systems range from open to closed loop systems
and may vary in chip standards, transponder shapes and card types for example.
In addition, contactless payment functions may be used strictly for payment
purpose like MasterCards’ “PayPass” or alternatively be integrated in
multifunctional city and tourist cards for public transport such as Octopus or
even student passes.
From the sports and leisure market perspective, there is similar diversity of
cashless payment alternatives in comparison to other market sections, too. The
following factors should be analyzed and evaluated thoroughly in the decision
process for the implementation of any solution in a sports environment.
Open-loop vs. closed-loop payment system
The main difference between an open-loop and a closed-loop system lies in the
amount of acceptance points offered to an end customer. Closed-loop networks
accept cashless payment possibilities exclusively at the respective venue or
venues which belong to the same system. Distinctive examples for such kind of
system in Europe are the “Justpay” model supplied by payment solution or other
systems provided by Chess iX and ArenaCult to name a few. With this solution,
the payment medium cannot be used anywhere outside the designated stadiums
and arenas. In contrast to closed systems, an open-loop network like the
22www.nfc-forum.org
©2012 BTD GROUP
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“Geldkarte”, which is a chip-based e-wallet from the German banking industry,23
“payWave” by Visa or “PayPass” by Mastercard, allow purchases both in
stadiums and at all acceptance points outside the venues.
Another important distinctive aspect is the number of different parties involved
in the card issuing, transactions handling and money acquiring process. An open
system, such as Visa or MasterCard required separate players for each process
such as card issuing banks, independent payment network provided by the
organization and the merchant’s financial institutions for diverse settlements. In
contrast a closed-loop model may be almost entirely supported just by one
organization providing all process steps from one source.
System mode Open-loop payment
system
Closed-loop payment
system
Main Suppliers (stadium
market) in Europe
S Card, MasterCard, Chess iX,
eventcash, payment solution,
etc.
payment solution, Arenacult,
OPC, Automaten Seitz, Chess
iX, Micros, Magna Carta, etc.
Benefits • wide card acceptance
inside and outside of the
venue
• easier argumentation
basis for the club before
cashless payment
introduction
• independent and self-
contained system
refinancing
• high-grade system
reliability
• flexible systems
extensibility
Disadvantages • strong technical,
operational and financial
dependency on bank
partner
• system refinancing is
mostly possible by
means of sponsorship
• challenge due to fan
acceptance during the
introduction phase
• card acceptance within a
certain venue or just
couples of venues
respectively
23www.geldkarte.de
©2012 BTD GROUP
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• breakdown of online
modus may cause
essential risks
• in some cases bank
license required
System • “GeldKarte” as
personalized or
impersonalized prepaid
card or in conjunction
with debit card
• “PayPass” in conjunction
with impersonalized
MasterCard prepaid card
or personalized
MasterCard credit card
• “Justpay” model
• Several closed stand-
alone installations on the
basis of prepaid cards
Example E.g. BayArena, Coface Arena,
Mercedes-Benz Arena,
Poznań Stadium
E.g. Allianz Arena, Donbass
Arena, Commerzbank-Arena,
Veltins -Arena , Weser Stadion
etc.
© BTD Group 08.05.2012
Open-loop vs. closed-loop payment system
(venues and suppliers are examples, not meant to provide a complete listing)
Self-operation vs. external-operation (rented model)
After a decision is made by club or stadium executives to implement a cashless
payment solution, there are some vital issues to be considered. For instance, to
purchase or to rent a system as well as the decision on who should operate the
system. In most cases different cashless payment software and hardware can
initially be bought or rented regardless of whether the system operation will be
accomplished by the system owner or will be outsourced to a third party. The
extent of an outsourcing model may vary thereby depending on the stadium or
club needs and range from providing match day support to the complete
takeover of the entire solution.
System operation
mode Self-operation
External-operation
(rented model)
©2012 BTD GROUP
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Main Suppliers
(stadium market) in
Europe
Eventcash (SSG Lange &
Partner), payment
solution, ArenaCult, OPC,
Chess iX, Micros, Magna
Carta etc.
Eventcash (SSG Lange &
Partner), payment
solution, ArenaCult, Chess
iX, etc.
Benefits • gained know-how
remains in-house
• better regulation and
monitoring
possibilities
• higher revenue share
• superintendence of
residual card
amounts
• almost no
investment required
• professional system
support and
maintenance
• system operator is
highly interested in
revenue increasing
• lower system
responsibility
Disadvantages • investment risk
• additional operational
efforts and costs
• extra manpower
required
• limited profit
participation
• dependency on
system supplier
• extra player
Example Allianz Arena, AFG Arena
St. Gallen, Stadion
Wroclaw, Bremer Weser-
Stadion, Veltins-Arena etc.
E.g. Amsterdam Arena,
Justpay-stadiums:
Commerzbank-Arena,
RheinEnergieStadion,
Fritz-Walter-Stadion,
WIRSOL Rhein-Neckar-
Arena etc.
© BTD Group 08.05.2012
Self-operation vs. external-operation (not meant to provide a complete listing)
©2012 BTD GROUP
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Contactless vs. contact smart cards
Both contact and contactless cards can be applied in conjunction with open or
closed loop systems. While contactless transponder technology allows a payment
process to be made by holding the payment medium a couple of centimeters in
front of a reader device, a contact card has to be inserted into a reader. There
are several possibilities to process a contactless and a contact card payment
which impact on the overall speed of the selling process e.g. on the local legal
dependencies and the club’s / venue’s requirements. Methods such as PIN code
input, receipt signature or “acceptance button” slow down the payment process,
whereas payment procedures without any confirmation accelerate the entire
sales process.
Because of faster transaction times presently most of the cashless payment
venues use a contactless technology based on RFID. However, older venues e.g.
the Veltins-Arena in Gelsenkirchen or the Amsterdam ArenA may still operate
contact card based payment solutions which they innovatively implemented over
ten years ago. Though recently, also Amsterdam ArenA has signed a strategic
partnership with a Dutch ICT supplier with the intention to replace their solution
with an advanced contactless NFC infrastructure.24
3.3 Critical requirements and parameters regarding cashless payment
An implementation of a cashless payment system is certainly an important
decision and a challenge for a club or venue, not simply because of the relatively
high investment involved, but also as it implies major changes for the club, fans
and the catering company. Several vital aspects therefore must be considered
from a technical, financial and operational viewpoint as the complex
implementation requires fundamental planning and the involvement of various
parties such as the venue owner, operating company, suppliers, public
institutions, catering company and others. In order to increase acceptance
amongst the fans, the marketing department has to additionally plan a
communication process to fans before the cashless payment system goes live. A
PR campaign should be developed demonstrating the new procedures and
highlight the benefits of the new solution. In general, to ensure a smooth and
24Press release Chess iX, 22.11.2011
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efficient project, the following aspects should be thoroughly examined during the
planning phase.
Essential requirements
• Critical mass of spectators required
• Physical condition of the building and facilities
• Appropriate number of kiosks and POS
• Fan acceptance
• Legal requirements
• Cooperative approach of a catering company
Technical requirements
• Reliable and secure IT infrastructure
• network availability in dedicated areas of the venue
• Resilient backend architecture
• Default concept for Network failure
• Interface concept to other stadium systems (Access Control, Ticketing,
Parking, CRM etc.)
Financial requirements/parameters
• Sound Investment planning
• Investment participating partner (sponsoring bank, municipal sources,
catering company etc.)
• Purchase vs. leasing/rent
• Refinancing plan for one-time and ongoing costs
Operational requirements
• Successive gaining of operational know how for cashless payment operator
©2012 BTD GROUP
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• Employing of operational staff and mobile vendors
• Staff training and coaching
• Improvement of kiosk operation in order to increase the sales speed at and
behind the kiosk counter
• Comprehensive operational concept for cashless payment system
• Contract management with different suppliers and parties
3.4 Financial aspects of cashless payment
system Cost example – closed cashless payment system
In the following BTD will present an example of a rough cost overview for a
cashless payment solution in a thirty thousand seater stadium. Please note that
the actual costs may differ significantly depending on the various factors
involved e.g. required hardware amount, offered hardware and software types,
backend infrastructure, etc.
©2012 BTD GROUP
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Dear Reader,
Thank you for your interest in our
Whitepaper. If you find the information
useful and would like to receive a free
copy of the full document please send
us a short E-Mail to whitepaper@btd.de
with the reference “Whitepaper Cashless
Payment in the Sports Industry”
together with your name and contact
details. Your data will not be provided to
any third parties. However we will allow
ourselves to ad you to our own
newsletter list. Newsletters are issued
on an irregular basis but never more
than once a month.
You will then receive the full document
at no cost by E-Mail in pdf format.
Thank you for your interest.
Your BTD- Team
Contact details:
BTD International Consulting Goethe Str. 34 80336 München Tel: +49 (89) 660 291 0
Email: info@btd.de www.btd.de
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