By Neil Harris, Chief Commercial Officer at Global Processing Services
By now, contactless payment is an everyday reality for most of us. As we experience the convenience of simply tapping a card against a screen, it feels like paying for purchases couldn’t get any easier. But the most exciting Paytech of Things revolution is only just beginning. Transforming an everyday object into a payment device such as that of wearables, where payment is not only effortless, but it also integrates perfectly into your outfit and lifestyle.
The Rise of the Smartwatch
Wearables have been around since the watch was invented in 1500. Smart wearable tech, however, is just coming up on a decade of regular use, starting in 2009 with the release of the Fitbit. The first type of wearable tech that really took off was the activity monitor, designed to measure simple health indicators like step-count and heart-rate. Then in 2013, Samsung released the Galaxy Gear, with the Apple Watch hot on its heels. The era of smartwatches had begun.
The latest smartwatches are essentially miniature smartphones, with most of the same capabilities and an advanced level of convenience in certain areas, including making payments.
Smartwatches, like smartphones, make use of near-field communication (NFC) to enable payments. Any two NFC-enabled devices can communicate when you bring them within 4cm of one another. So instead of digging through your pocket to find your wallet, you can now send a secure payment with a literal flick of the wrist.
New Wearable Innovations
As the technology behind wearable payments becomes ever-more streamlined, so too do wearable payment devices. Visa unveiled a prototype of payment-enabled sunglasses in early 2017. A year later, they made a splash at the Winter Olympics in PyeongChang by offering fans payment-enabled gloves, stickers and commemorative pins. Australia’s Bankwest became one of the first banks to dip their toe in with the Halo, a ring that lets you first-bump a terminal to make a payment. The Halo is even waterproof up to 50m, so you don’t have to take it off when you wash your hands. Dutch bank ABN AMRO plans to give its customers even more options. In early 2018 they launched a pilot scheme, allowing 500 clients to make payments using new rings, bracelets, watches and keyrings. The experiment was a huge success, with 78% of participants saying their now prefer wearables to their usual credit or debit card.
It’s not only banks that are getting in on the action. Fintech companies are taking advantage of flexible issue processing platforms to innovate with their own new wearables. Take bracelets by jewellery brand Armillion for example, payment-enabled by GPS Apex. These luxe accessories also allow secure access to your home and office, detecting your movements so they can lock and unlock all the doors for you. Like the Halo and other wearable payment devices, Armillion never needs charging. That’s another major advantage of using a wearable payment device over a smartphone or smartwatch, especially in an emergency situation.
Flexible & Fashion-Forward
Basic wearables are often inexpensive to make and can be incredibly robust. It’s no surprise, then, that the technology is being adopted by major conglomerates like Disney for use at their resorts. At Disney World, residents of the resort can use their MagicBand to pay for food and merchandise. The payment-enabled bracelet also works as a hotel room key and a check-in device. Similarly, American Express launched the Amex Band to allow their members to make payments at the 2018 US Open.
Barclaycard’s bPay, meanwhile, is seizing on the fashionable potential of wearable payments devices. bPay has collaborated with Topshop to create fun, colourful bracelets, keyrings and stickers, designed to capture the attention of the young adult market. Never one to be left out, Visa is following the lead of companies like Armillion to launch a line of stylish, high-end payment-enabled jewellery in collaboration with Folli Follie and Links of London. These are soon to be seen on the wrists of early-adopters in Greece, where the line will first be launched.
Keeping Wearable Payments Safe
Those who hesitate to join the wearable payment revolution often cite the perceived risk. Payment-enabled accessories are seen as easier to misplace than cards and could be used by anyone who picks them up. A sparkly piece of jewellery will soon attract the attention of thieves, even if they don’t know that it’s payment-enabled. To keep those reasonable concerns in check, most wearable payment devices, like contactless cards, have an upper spending limit of around £30 per transaction. However, those concerns may soon be a thing of the past. Some wearables already offer enhanced security, like Armillion, which requires the use of a PIN for more expensive transactions. It’s likely that future wearables will also incorporate biometrics, so they cannot be used by anyone but their rightful owner. Mastercard is already on the case, promising to unveil “personalised, seamless cashless payments” at Expo 2020 in Dubai.
A Rapidly-Growing Market
Barclaycard’s Contactless Spending Index reports that wearable payments increased by 365% in 2017, compared to the year before. Contactless payment on the whole accounts for six in ten low-value electronic payment transactions, and this figure is only set to increase. According to Mastercard, a quarter of Europeans (175 million people) are ready to start using wearable payments in the near future. At the same time, concerns around contactless payment fraud have seen a huge drop of around 24% on average across the continent.
Those who would rather dismiss wearable payments as a fad are finding it impossible to make their case these days. The technology behind them has reached a point where secure payments can be made with the sleekest, prettiest and most personalised of accessories. Wearable devices also inexpensive enough to become pervasive, and have the potential to become more secure than any other payment option. The question now is not if wearable payments are the future, or even when they will arrive. What you really need to decide is, which wearable device suits your style the most?