CASHLESS PAYMENT & RFID - Stadionwelt · 1 Whitepaper - CASHLESS PAYMENT & RFID in the sports industry Over the last decade the concept of a cashless payment system and other solutions

©2012 BTD GROUP

19.06.2012 Whitepaper Cashless Payment Version 1.0

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CASHLESS PAYMENT & RFID in the sports industry

Status Quo and Future Development

Whitepaper

19.06.2012

Version 1.0

©2012 BTD GROUP


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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 [email protected].

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

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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


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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

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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

©2012 BTD GROUP


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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

©2012 BTD GROUP


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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

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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

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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

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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)

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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

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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 [email protected]

with the reference “Whitepaper Cashless

Payment in the Sports Industry”

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You will then receive the full document

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Thank you for your interest.

Your BTD- Team

Contact details:

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Email: [email protected] www.btd.de

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Documents

CASHLESS PAYMENT & RFID - Stadionwelt · 1 Whitepaper - CASHLESS PAYMENT & RFID in the sports industry Over the last decade the concept of a cashless payment system and other solutions