Why It’s Important for Arcades

From my time as an owner/operator to working FOR a card system to now, my stance about card systems has not changed or wavered. They are usually the best option. The revenue increases I have seen from cashless payments support this view. If you don’t have a cashless solution, you need one, and I’ll explain why. Use as many features as possible to maximize your revenues if you already have one. Take the time to engage with your card system company and learn about its features. 

First, I want to clarify what I mean by “cashless.” Cashless doesn’t mean that you no longer accept cash. Cashless payments mean minimizing the amount of cash in your employees’ hands.   

Here are the top 5 reasons you should not operate an arcade without a debit card system.

ROI (Return On Investment)

In any business, one of the key metrics is how quickly a piece of equipment or investment will pay for itself and begin generating profits. Most locations I have asked this question about have reported quick ROIs.  Many of them have reported as short as a three to seven-month ROI. That is comparable to and often competitive with many arcade games, and it is quicker than many larger attractions. 

Because game distributors know this and understand that you will make more money with a card system than without, they often recommend cutting a couple of games from your arcade wish list and investing in a card system instead. Although they make a little less on the initial sale, most of your distributors understand that the relationships you make with your vendors are long-term partnerships. The more successful you are as a business owner, the more you will be able to afford down the road. 

Financing Options

Most financing companies will finance your card system. Many also have special offers that can delay payments or interest. With such a short ROI and competitive financing programs, the answer “I can’t afford it” really doesn’t apply. In reality, you can’t afford NOT to do it. If you don’t have a card system, you’re likely leaving a considerable amount of money on the table. This no longer applies only to larger FECs. 

When It Makes Sense

These systems typically make financial sense for location games with about 8-10 games or more. Some of this depends on your throughput and demographics. To determine how a system would work for your location, consult with your arcade distributor or an industry expert. They can help you evaluate your current numbers, determine the average game room increases when you install a system, and assist you in projecting your ROI. I understand that there are locations that are successful and profitable, yet still use tokens and tickets. 

I have heard the old adage, “If it isn’t broke, don’t fix it.” To me, that is the same as if your customers came in and offered you $20 for a specific product or service, and in response, you negotiated with, “no thanks, I would prefer if you just gave me $15, I don’t really need the extra $5. $15 got me a lot of stuff 20 years ago, so I’m good with that amount.” Just as you should upgrade and stay current with your décor, lighting, music, and games, you also should grow with technology so it doesn’t leave you behind.

Save Money

The most obvious place to save is in the cost of paper tickets and tokens. Tickets are expensive, considering the costs of printing, shipping, storing, securing, shredding, and disposing of them. Not only are the actual tickets expensive, but the labor is costly. Stocking tickets in the games throughout the day and fixing ticket and token jams. I have yet to meet anyone who says they love their ticket-eating machine. With cashless payments, you save on hard costs and labor and increase customer satisfaction. 

I have never seen a customer who had to wait at a game for an attendant to unjam or stock tickets who was thrilled with that part of their experience. The more seamless the process, the more enjoyable your guests will find it. You will also save on the repair costs of your games. Ticket dust takes a toll on your games, and your game maintenance and repair costs will typically drop after installing a card system.            

Make More Money

On average, game rooms experience a 20-30 percent increase in revenue once they install a card system, without utilizing any additional marketing features included in the system. So many more options with a card system lead to revenue increases. For example, you can adjust your game pricing in smaller increments. Rather than increasing or decreasing by a full quarter (or token), you can adjust your games up or down by dimes, nickels, or even pennies. If you choose, you can use credits rather than cash value and make a credit worth whatever amount you want. 

There isn’t a mental barrier for the guest to have to drop in more than four tokens or quarters to play a game. No matter what game or cost, it only takes them one swipe or tap to start the game. This opens up the possibility of dynamic pricing, where you can offer a higher price during peak hours and lower pricing during slower times. You can set this directly in your system, without needing to think about it.

Create Packages

Card systems also allow for the packaging of attractions, games, and food, and offer the option of timed play. All of these things can increase revenues in your game room and increase customer satisfaction. Additionally, most card systems offer various marketing, VIP, and Membership options and programs. I won’t go into these as each system has some unique features in this area, but all of the systems will offer some great marketing options to increase revenue that are not possible without a card system.

In addition to everything else, there is also the consideration of “float” to consider. Float is the amount of money, attractions, and tickets that remain on game cards and are never redeemed. There is a reason that when a company gives you a rebate check these days, it is usually in the form of a gift card rather than a check. They do this because they understand that some of that money will remain on cards, get lost, and never get redeemed. 

This is the same thing that happens in your center. If you have tokens, most of them will likely be used before the guest leaves. No one wants to walk around with a bunch of tokens in their pocket, saving them for next time. This is not the same as a game card. When investing in a card system, you will want to discuss the proper ways to account for your float with your accountant.      

Reporting

Real-time reporting is so important to your business. Having the ability to be notified the moment that a game is put out of service will help you make more money. The reporting measures in your card system will help you keep your game room up and running efficiently and effectively. You won’t have to wait until the end of the week to know when a game is paying out incorrectly. You will always know exactly how much money you are making, allowing you to properly staff and manage labor costs. 

Theft Control

Theft control will help you save money and increase your profitability. When I first started in the FEC business, I took a class at IAAPA. The instructor said, “If you think your employees aren’t stealing from you, you are wrong”. It’s true. Maybe it’s just a tootsie roll from redemption, or perhaps they are hooking their friends up with that unsecured bundle of tickets. The card system offers you visibility into everything your employees are doing. Whenever a cash drawer is opened or a card is swiped, you can keep your guests honest, as it will also track their transactions. 

How many times have you heard from someone that they dropped a coin in a game and it didn’t let them play or didn’t pay out tickets properly? Without cashless payments, there is no way to verify that. With a card system, you can see exactly what they played and how many tickets were dispensed. You would be surprised at how many installs I’ve attended where the employees say, “Oh, man…now I can’t take candy anymore” when they hear about the redemption inventory controls. 

Times Change

Savvy business owners understand this and are flexible enough to adapt to the changing times. Unless you still use a pager, a pay phone, and an 8-track, ensure you treat your business like the rest of your life. Research and utilize the latest technologies in your business. Don’t get into that trap of “I’m going to do it this way because that is how I’ve always done it.” You will get left behind.       

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