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It must have been about 8 years ago that the first Near Field Communication was introduced into the events world. During that period we produced at the Muntjesfabriek about 35 million break coins and a small one 3 million round consumption coins. The entire international events and festival coin market involves hundreds of millions of coins. NFC meant the end of this payment currency! …We honestly had stomach aches.
The payment systems used during the festivals in the Netherlands were mainly supplied by LOC7000 and Dutchband. A sophisticated method of an alternative payment system and dispensing machines that made both cash and debit card payments possible. And of course, these market leaders were quick to develop a digital payment system in addition to the plastic payment coin. With numerous advantages:
At first glance, a blessing for the sector! But this victory does require a significant investment in infrastructure. And also a system that places considerable demands on the bandwidth of the internet connection. In addition, there must be a backup system in case the internet connection unexpectedly fails. These obstacles have now largely been resolved and NFC has made considerable progress. And NFC is still evolving within the events world, which means that the threshold for using a digital payment system is becoming increasingly lower, even for smaller events.
What then is the advantage of physical payment coins? First of all, this revolves around the initial costs; For physical payment coins you need one (or more) dispensing points, while for a digital payment system, cash registers must be placed at almost every beverage and food dispensing point. Cash registers that are of course linked to the central system. And this costs money. Although much less than in the initial period, these are still costs that have to be incurred.
In addition, purchasing an old-fashioned payment coin also requires the necessary euros.
But there is a nice revenue model behind this: at all festivals where the old-fashioned payment currency is still used, 3% to 6% of the coins issued are sold, but not spent!!
For festival visitors, this phenomenon really argues in favor of NFC… but not for the organizer!
Psychology also plays a role; Festivals derive their right to exist from experience. Various tests have shown that the physical coin contributes to this experience. It also appears that once purchased coins are much easier to spend than having to withdraw money from the cash register again. Time and again it appears that the necessary visitors only find out at home that there are still a number of unspent coins left.
A calculation example:
Suppose an average festival sells 300,000 coins at a value of € 2.80, then 3 to 6% of undelivered coins quickly means a net additional revenue of € 25,000 to € 50,000.
Compared to the purchase costs of the coin of around € 7,500, it is clear that the coin as a means of payment for the organizer yields more net than any NFC solution!
In addition, the event currency appears to convey more in terms of branding than all digital solutions; After all, paying at many festivals is no different than paying at the supermarket or hardware store. A physical coin shows the festival logo every time.
The role of physical money in the gray economy is of course the amount of cash that is still circulating in many sectors. Whether it can be justified or not, this factor will certainly contribute to the survival of the ancient event currency.
But also consider the use of physical currency in savings systems; The break coin appears to be an excellent vehicle for a savings campaign, especially for smaller retail organizations. People like to get something physical in their hands when saving. Many associations also use the physical currency during events to create added value for the association. Festivals also respond to this by providing the coins with a print of the performing artists... how nice is such a souvenir?
The Mint and the Environment are somewhat at odds with each other. In terms of environmental pollution seems NFC then a better method. Although more and more coins are being produced from recycled materials, it can happen that a bunch of plastic is left behind after the festival. For this reason, the sector also explicitly selects suppliers with a circular solution.
VanDerEng stands for Zero Waste. And because as a producer we do much more than make coins, we also have all the (recycling) equipment available to give used payment coins a new life. For example as fresh festival mint!
As one of the larger producers of both break coins as the round consumption coin, we will take back all used coins. These coins are washed, dried, ground and then processed into new coins.
When I look at the growing amounts of coins that we produce annually, I certainly don't get the impression that this form of payment is in a terminal stage. In fact, the physical payment coin has not lost any of its value as a counterpart to NFC - especially for local events.
Of course I can be reached by telephone or email for questions and suggestions!
Ernst de Haas
Director of owner VanDerEng BV.
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