It traces its origins to Rhythm and Vines, and has taken a chunk of the festival payments industry across the Tasman too. Russell Brown discovers the company behind summer fun is getting serious to find new customers.
Have you ever looked, I mean, really looked at that chip on your wrist?
If you’ve attended Rhythm and Vines, Splore, Auckland City Limits, Northern Bass, Beervana, Toast Martinborough, Wellington on a Plate or any of about 50 other events in recent years, then yes, you’ve probably at least glanced at it. You may also have asked, how did it get there? And who and what is AWOP anyway? The answer begins – and to some extent ends – with the bars.
Event promoters have a love-hate relationship with their bars. On the one hand, setting up and running a festival bar is a painful and thankless task. You’ll have liquor licensing and the police breathing down your neck. If you get it wrong, even for half an hour, everyone hates you. If you get it right and you’re not very careful, you get the actual thing you don’t want for your event: drunk people.
On the other hand, bars make money (although the proceeds of a cash bar also represent a security and logistics problem themselves). You can not only sell drinks at a solid margin, you can sell “pourage” – the right to be sold – to big liquor brands. This may well be how your event breaks even. Bars: you can’t live without ’em, but you’d like to find the best possible way of living with ’em.
A decade ago, Andrew Mowbray, a chemical engineering student at the University of Auckland, was mulling a better way. The restaurant he’d been managing to support his studies had shut down for the Christmas break and one of his bar staff asked him if he’d like to set up and manage the bar at the Baywatch campground for Rhythm and Vines punters, and the cocktail bar at R&V itself.
“What it really came down to was that we had a ridiculous number of people,” says Mowbray. “You hire a bunch of transient staff and those transient staff have no vested interested in your business. So the amount of cash theft that used to go on was crazy.
“Also, when you’re running a bar with cash or with Eftpos, it’s a very slow way to transact. You end up spending more time messing around and trying to actually do the transaction than serving the drinks. So I thought, there’s got to be a better way to do this and I sat down and looked at what the available technology was and build a system to try and make it so the bars run more transparently.”
After a successful run at R&V, that system became AWOP (it stands for Another Way of Paying). It dominates the events market in New Zealand, has a significant share in Australia, and cashless payment business as far afield as Europe.
It’s all run from an old dairy factory in Matangi, near Hamilton, which was bought and redeveloped in 2004 by Mowbray’s father Harry. It’s the same factory that spawned Zuru, the $500 million toy company founded by his siblings Nick Mat and Anna. (Only in this family could the guy who built a company that completely dominates its national sector look like the underachiever.)
It works like this: each AWOP wristband or card contains an RFID (radio frequency identification) chip to which cash value is added or subtracted with a handheld terminal. Although Mowbray had the terminals designed for the company’s needs, there is no special magic in them.
RFID is a generation older than the NFC chips in your Hop or Snapper cards, and the 24-bit encryption that protects the system from value being illicitly added is standard-issue (but still very important, because the balance and transactions written on the card are the sole record of value). The chips themselves are cheap as, well, you know, chips.
“We went into the design with a set of criteria,” says Mowbray. “Having run bars, I was pretty focused on having something that was robust enough for bartenders to use. We wanted to build something that it no matter what happened – if every network on site collapsed – we had a system that was as robust as using cash.”
“What a lot of other payment systems have done in the past is to use an onsite database, and when a chip’s scanned it talks to the database to check the account. Those systems are prone to failure. We decided to have it so the information is all on the chip. And then the scanners we use actually just take the money off the chip and store the transaction on it. We wanted it to be able to work in a bar without any risk of the system actually stopping.”
“They’ve always run quite seamlessly,” confirms Fred Kublikowski, the production manager at Splore, which became an AWOP customer early on. “How they do it I don’t exactly know, but it’s a hell of a system.”
Going cashless also relieved the organisers of one of the major issues with onsite commerce: the actual cash. Kublikowski says the three-day festival’s former business manager would “literally sleep on a mattress of cash. Over the weekend her mattress got fatter and fatter. Not having to worry about that is incredibly relieving.
“You do have to have absolute trust in your RFID merchant supplier. I have to trust Andrew 100%. There is no way of making this work unless you have that 100% trust. It’s a very transparent system, but ultimately all you’re seeing in the end is numbers on a spreadsheet that they control.”
One thing Splore doesn’t do with the system is track anyone.
“Early on when AWOP was introduced, Splore had its hippie roots and some people had some misgivings about it. There was a pledge made that we would minimise the data tracking, so our audience didn’t feel they were being invaded.
“We’ve been offered the opportunity to add a ticket profile, the identity that’s on your ticket, to your wristband, which means we could potentially link it to all your purchases – and if we were really clever about it, we could link it to your credit card transactions. You can actually get quite deep data and that could be valuable. Some other events are very much into that – the ages of people who are at certain places at certain times and that sort of stuff.”
AWOP’s merchant site does indeed advertise demographic data as a service, “allowing us to provide you with the reports that tell you who purchased what products at what time” – useful information for post-event marketing. But does that mean linking individual names with purchase histories?
“We can do it, but for 90% of our events we don’t link the customer to the chip. We don’t push any of that information out,” says Mowbray. “I’m big on privacy and I think it’s important for people to not be known unless they specifically want to, so for us it’s more a case of providing a lot of generic data.
“We can say to an event, hey look, this is your target market, 18-24 years old, this is what they like drinking, this is what they like eating, this is where you can expect them to spend time onsite. But we don’t give any names or information about the customers away to the event.”
The only local event currently linking customers’ names to their numbered wristbands is Rhythm and Vines.
“One of the reasons they like being able to track the customers is that they’ve got quite strict alcohol policies,” says Mowbray. “So when people are yellow-carded they’re actually able to know the names. They also like to be able to pull people out if they need to. They can pull up a name and cancel that name on the door.”
If wristbands are used as part of an event’s access and ticketing system, then the agency that sells tickets will need to know both the number on the wristband chip and the customer’s name.
“And we track all the sales of that wristband. If the two are put together and the event gets the names and wristband numbers from the ticketing company, and the wristband numbers and sales from us, then they could join it up and see what people bought. Rhythm and Vines would be able to link the two together if they did that, but they haven’t ever asked us for the purchase history of individual wristbands. So, they don’t do it.”
Auckland City Limits was a first-time AWOP customer this year, and its patrons were able to opt in to a different kind of tracking using their AWOP wristbands. An activation designed for Spark and Spotify by the brand agency Spur let punters scan their chips at bollards around the site and have their day captured as #MyFestivalStory, which let them link up and share set lists, photographs and more. Just over 4000 people did that.
On a more practical level, AWOP’s system offers various ways to deal with one of those perennial bar issues: the people who drink too much. The chips can be set so they need activation for alcohol sales (you may have experienced this at Auckland City Limits) – and that permission can be reversed. The “yellow card” feature can even be used to prevent the wearer going to any access-controlled area.
One reason the more sophisticated features are lightly used is that they come at a cost to the events. There’s not much sense in paying for demographic drill-downs you can’t really use. In general, AWOP makes money by charging a processing fee, which varies according to the size and timespan of the event (Splore pays 2.5% and adds the same again as its own commission on onsite vendor sales). For smaller events – including all the summer shows at the Mangawhai Tavern last summer – AWOP can negotiate a flat fee.
But if the old dairy factory offers plenty of room for AWOP’s six full-time staff, the constraints of a small market can be an issue. Mowbray admits the company is already doing “most of the events we want to do” in New Zealand. Even in Australia, where AWOP has a decent market share, scope for more is limited. It’s already booked for New Year’s Eve 2018, with R&V and the 60,000-capacity Woodford Folk Festival in Queensland.
Moreover, global operators are now competing in our market: the Hamilton Sevens, for instance, talked with AWOP before going with the UK-based Glownet for purchases and ticketing. (Embarrassingly, Glownet’s system went down for hours on the Saturday afternoon.)
AWOP has expanded its product range to include Eftpos equipment hire and satellite internet services, but its future growth may lie outside the event business. The company is building an inventory system for an Australian company that uses RFID tags with built-in lights that display when the chip’s number is entered into a terminal.
“It’s whole different sector,” says Mowbray. “We also go to trial at the end of April with Toll Australia. We’re in the middle of trying to build the world’s first fully-live real-time track and trace system. They want to be able to live track and trace every parcel and we want to be able to say, right, that parcel is in this vehicle and here it is on the road. So we can track a parcel anywhere in Australia down to five metres.”
But there’s one more thing you want to know, right? What happens to that money you left on your wristband and never got around to reclaiming from AWOP’s website? Who gets the cash?
Short answer: the event does. Promoters also determine the time allowed for refunds. AWOP suggests four weeks’ grace, but some events have allowed as little as a week. How much money is typically left over? Mowbray says it averages out to $1 to $1.50 per patron. Some events pass on the unclaimed money to a nominated charity, others treat it as revenue. Kublikowski is happy to acknowledge Splore is in the latter camp.
“We do this thing on very tight margins. After we’ve paid a thousand invoices and spent two million dollars, it’s nice to get a little bit of money back in the bank account.”
The Spinoff’s business content is brought to you by our friends at Kiwibank. Kiwibank backs small to medium businesses, social enterprises and Kiwis who innovate to make good things happen.
The Bulletin is The Spinoff’s acclaimed daily digest of New Zealand’s most important stories, delivered directly to your inbox each morning.