The payments industry is today witnessing rapid and disruptive innovation across its value chain. Technology has rapidly multiplied efficiency in wearable payments to far beyond mobile devices. It has amazingly integrated payment methods into apparel, fashion accessories and other adaptable wearables.
We thus have Paypal and Starbucks further innovating on ‘smart-watch’ technology. Mastercard is looking at a wearable payment system with clothes and accessories for ‘touch-less’ payments. Nymi, the smart wristband, allows authentication through biometrics. Fitness wristband Jawbone has teamed up with American Express in the US. Xiaomi’s MiBand has made Alipay its partner in China. Multitudes of near field communication (NFC) devices periodically enter the market. Power Reviews1 reports that 82% of shoppers looked to wearable technology to enhance their shopping experience, and 22% wanted touch-less or one-click payment.
Welcome to the world of wearables. Gartner states that “by 2018, 50% of consumers in mature markets will use smartphones or wearables for mobile payments.”.2
From a logical and convenience perspective, wearable payments make great sense. Leave your wallet at home and pay with your wearable device. Enjoy greater convenience, personalized support, offers and discounts. The question is, can it become a mainstream payment method?
The commerce of wearables
Figure 1 shows how America made their payments in 2015.
Tractica3 estimates that worldwide wearable payments are currently around $3.1 billion and will grow to $501 billion by 2020. Gartner predicts that 50% of consumers in mature markets will use smartphones or wearables for payments by 2018. Pundits are unanimous that possibilities are unending and only the reach of innovation will limit the scope of wearable payments.
Not without challenges
As with anything new and innovative, wearable payments have their own set of challenges.
Pricing, for one. Some of them are placed out of reach of ubiquitous use. The comfortable popularity of mobile-based NFC payment could outpace other wearables. Concerns on security still remain. And finally, the wearable wallet will need to bundle payments with non-payment services such as coupons, loyalty, or digital receipts to create strong value for consumers other than just the gizmo geeks.
The road beyond wearables
Clearly consumers are interacting with devices far beyond beyond plastic and smartphones with unbelievable ease. So what lies next in the foreseeable future? Are today’s wearables, exciting as they may be, just a transitional technology? Will the ultimate end-goal be an integrated implantation with our body? Looking at the hurtling pace and panorama of innovation nothing seems impossible. It is very possible that our environment will automatically adjust to our physiological, emotional and physical needs through chips and systems embedded in our bodies.
Will the wheel of innovation turn full circle? Only time can tell.
1 – ‘2015 Mobile, Wearable Tech and Hyper-Relavance’
2 – Gartner, Predicts 2016: Know Your Customers to Capture Opportunities in the Personal Technologies Market.”, November 18, 2015
3 – ‘Worldpay’ Report
Blogger: Ashish Nathani