PayPal, Earthquakes Deal Demonstrates Long-Term Benefits of Contactless Transactions
BY ADAM GROSSMAN
One common question B6A receives is what are the long-term implications of COVID-19’s impact on the sports business. One seemingly clear result is the rapidly increasing adoption of contactless transactions at venues. This is reinforced by PayPal’s new agreement to become the naming rights partner of the San Jose Earthquakes.
A key component of the agreement is that “PayPal-owned Venmo will be accepted at all commercial touchpoints of an Earthquakes match, with fans able to purchase tickets, parking passes, merchandise, and concessions through the app by scanning QR codes inside PayPal Park using their smartphones. This is designed to reduce the amount of cash exchanges and personal interactions in the wake of COVID-19 and will also enable fans to earn rewards through a Venmo loyalty program.”
PayPal and the Earthquakes are building on a sports business strategy started by the Tampa Bay Rays in 2019 when it became the first North American sports team to go cashless at its venue. Rays fans are able to buy items at Tropicana field with “major credit cards, official club gift cards, Apple Pay and Samsung Pay, as well as Rays Cards, which are provided to season-ticket holders.”
The Rays had the opportunity to do well by doing good. More specifically, the Rays goal by going cashless was to have “faster moving lines and increased fan satisfaction.” While fans definitely want to make purchases more quickly, faster moving lines also means that the team can likely sell a higher volume of goods and increase overall revenues.
The Rays also understood the value of the loyalty programs highlighted in the PayPal / Earthquakes deal. The Rays can also use the electronic transaction information to send targeted promotions for in-venue purchases including tickets, concessions, and merchandise. In particular, potentially sending a promotion for an in-venue seat upgrade to fans already at Tropicana Field presents a new way for the Rays to increase ticketing revenues for a team that has struggled with ticket sales.
Top-line revenue growth from in-stadium purchases is only one benefit of the new cashless approach. Cashless purchasing provides, “a rich source of data that can be used to better understand consumer behavior, which helps companies sell in a way that is more targeted to the unique needs of [an] individual.”
Going cashless for in-stadium purchases should help teams increase corporate partnership revenue as well. More specifically, understanding customer behavior using purchasing data is one of the most important priorities for corporate partners of sports teams.
Teams have already moved in this direction by going cashless for tickets. Many teams have turned to digital and / or mobile ticketing in part so that they can have a more robust picture of fan behavior including with whom fans share their tickets and when they arrive at a venue. Ticketing behavior, however, is only part of a fan’s overall experience. Moving to a completely cashless approach means that the Earthquakes will have information on what, when, and how much fans purchase at their venue.
Having robust purchasing data can then also be combined with demographic information from other sources to create the most robust fan profiles possible. For example, the Block Six Analytics Partnership Scoreboard can combine purchasing data with demographic data from our Audience Inference Platform (AIP) to understand fans from a spend, education, ethnicity, gender, and annual income perspective. Teams can then find partners whose customers either now or in the future best fit different fan profiles.
Before teams or partners leverage the data that can be made available from a cashless venue, it is critical to understand the privacy and legal issues associated with data collection. In particular, it is important to understand the laws and issues around personally identifiable information (PII) and how to take steps to employ “anonymization techniques to encrypt and obfuscate the PII so it is received in a non-personally identifiable form.” PII laws can differ from General Data Protection Regulation (GDPR) and should be examined as well.
Many of the payment providers working with the Earthquakes and the Rays mentioned earlier in this post, however, are fully aware of these privacy issues and can work with organizations to help ensure compliance. That is important because the more that teams can incorporate aggregated anonymized data sets in their analysis, the better they will be able to communicate value delivered to current and potential corporate partners.