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This Music Festival Let Attendees (Almost) Leave Their Wallets Home

Outside Lands, the San Francisco festival. Outside Lands, the San Francisco festival.
Outside Lands, the San Francisco festival. Phtograph by Kia Kokalitcheva

I lightly tapped my wrist against the small plastic reader, and my balance flashed: $50. The woman at the register punched in my order—three lemony drinks made with Tito’s Handmade Vodka—and I lightly tapped my wrist against the reader again. This time, a mere $5 flashed on the screen.

As you might have guessed, my wristband was acting as my wallet. This year, attendees of the annual Outside Lands music festival in San Francisco could load up their admission wristbands with money and use them as their wallets. The nifty feature is courtesy of PayPal (PYPL) and events tech company Intellitix, which provided the point-of-sale system that works with the radio frequency identification, or RFID, wristbands for attendees.

This was the first year all of Outside Lands’ attendees could pay for food and drinks using their wristbands—though it was payments giant PayPal’s fifth year partnering with the festival. The main tent, where attendees could purchase goodies, play video games, and charge their smartphones has been a fixture from the get-go. But this year, the payments giant decided to go with a video game arcade theme, in line with ’80s musicians headlining the show this year, including Duran Duran.

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“It’s not so much what PayPal is doing, it’s how the consumer is changing,” Anuj Nayar, PayPal’s global head of product communications, told Fortune of the company’s foray into mobile payments and novelties like the festival’s wristband-activated payments.

Inside the tent, arcade games and merchandise counters lined the walls, while a lounge-like smartphone charging station occupied the middle. There, almost two dozen people were crowded around the couches, chatting, tapping on their phones hooked on white cables, and waiting for them to charge up enough.

Last year, PayPal did a small test-drive of wristband payments with VIP guests, letting them pay for wine in a designated area of the festival, said Nayar. But PayPal has been providing this type of technology for festivals and large events in other parts of the world for more than two years.

For PayPal, this is part of the company’s journey into the mobile age—something it took a while to do, as Fortune‘s Leena Rao chronicled in a recent feature.

This accelerated in 2013 when PayPal acquired payments processing company Braintree. Luckily for PayPal, Braintree had just acquired Venmo, a mobile app for sending money to friends that’s been hugely popular among young adults. In a way, PayPal’s experiments with RFID wristband tags, smartwatches, and other non-traditional payment devices are part of its strategy to extend beyond the Web 1.0 version of PayPal most consumers know.

Last year, PayPal separated from its parent, eBay (EBAY).

“The PayPal of today is very different from the PayPal of yesterday,” said Nayar, adding that PayPal’s philosophy now is to focus on payments products that help both sides of a transaction—be it customers, merchants, or peers.

PayPal is also more open to working with companies it once considered competitors or enemies. The digital payments company recently announced a partnership with Visa, and Nayar says it works closely with giants like Facebook (FB) and Apple (AAPL), which are developing payments products and features of their own.

That said, while paying with my wristband was novel and almost addicting at first, it wasn’t as fun during the several brief outages. It appears they were mostly caused by bad Wi-Fi connections, according to the event staff I asked. I was also weary of adding too much money into my wristband “wallet.” While attendees could get a refund (minus a $5 processing fee) within 10 days after the festival, leaving money temporarily trapped in this invisible account didn’t sound appealing. Instead, I had to “top up” (to use the festival’s term) my account a few times before making purchases.

“Merchants were charged a fee consistent with our typical PayPal and credit card processing fees,” said a PayPal spokeswoman, adding that PayPal processed all wristband transactions made with credit cards and pre-loaded through PayPal.

Intellitix, the company behind the digital registers and wristband for Outside Lands, provides a wide variety of services and tools to events, mostly using RFID technology. It has worked with large festivals like Coachella, Bonaroo, and the UEFA Champions League Festival, among others. Other companies like Front Gate Tickets also offer similar tech for event organizers and venues.

But the RFID tags are just the gadget du jour, according to Nayar. “We don’t believe any one of them will win out,” he said of the various recent trends in mobile payments like smartwatches.

But one thing Nayar predicts will soon get a lot of attention is virtual reality, though it’s unclear whether it will be more successful than other forms of payments. That will depend on what works best for consumers, he added.

The story has been updated will later clarifications of Nayar’s comments about virtual reality payments.