Lollapalooza is rolling out a new initiative this week called Lolla Cashless that claims to be the first effort from a major U.S. music festival to use radio frequency identification (or RFID)-enabled wristbands for payments. The Chicago music festival will begin sending concertgoers bracelets leading up to the August event that can be linked to credit card information for buying food and drinks.

Here’s how it works: A small technology chip is embedded into the wristbands that concertgoers have to wear to enter Lollapalooza. Leading up to the event, attendees have the option to enter their credit card information once a bracelet is registered online. All of the restaurant and drink vendors will have point-of-sale systems set up so that users can tap the bracelets against a technology-enabled pad and type in a PIN code to pay for items. The payment is then automatically applied to a credit or debit card. "We feel like not only will that be big for us, but it will end up spreading across some of the other major festivals," said Patrick Dentler, marketing director at C3 Presents, which produces Lollapalooza, the Austin City Music Festival and the Austin Food & Wine Festival.

The tech-enabled wristbands also work offline, a smart move considering Internet connections at these types of events tend to be less than stellar. The point-of-sale systems will store transactions until they can be processed later if the Internet goes down.

Coachella, Bonnaroo and South by Southwest have also used RFID technology to tackle ticketing fraud and promote digital contests from sponsors. Already this year, marketers at Governor’s Ball Music Festival and Electronic Daisy Carnival are putting a big emphasis on digital to connect with smartphone-toting millennials. However, Lollapalooza’s effort that layers in e-commerce is interesting because it shows how music festivals testing new types of payments may give marketers like McDonald’s and Starbucks that are already betting on mobile payments some additional insight into how millennials actually use their smartphones at events.