Wearable technology in payments…

...the next revolution



By: Angus Lockhart
Blog

The demand from consumers for ease of access, adaptability and personalisation from technology shows no sign of slowing down – but how do we make this happen, and in a way that will affect their daily lives prolifically? Enter wearables.

When exploring the subject there is a huge spectrum of products, and levels of extremity. From what we already see on a day to day basis with our peers, to innovations that may seem more fitting to ‘futuristic’ style films…

Getting under our skin…

At the more extreme of the spectrum is a wearable actually being part of your person. You may have seen reports over the past couple of years of biohacking, particularly implanted RFID chips which integrate into the human body to facilitate interactions with connected technology.

Currently Biohax is leading the charge, having partnered with TUI in Sweden to implant chips in willing employees’ hands to facilitate building access, printing and interactions with other systems which require personal identification. However, it is unlikely that we will see mass consumer acceptance of these more invasive methods – at least in the next decade, and so in turn is life living inside the Matrix. What we do see is the omnipresence of the Internet of Things (IoT), and the contribution which wearables, as a new generation of human interface, makes to this market.

Who is wearing it well?

From AR/VR glasses, to smart helmets, clothing, watches, jewellery and shoes, a wide range of companies have taken advantage of lower hardware costs and greater consumer and enterprise acceptance to make moves in the market (see below).

This technology is permeating all aspects of a consumer’s life, yet equally growing less obvious. The latest and greatest isn’t meant to look like a large glistening piece of tech direct from a garage in the heart of Silicon Valley – rather it blends seamlessly in with consumers’ everyday lives.

For example, Google’s ambitious Project Jacquard looks to turn clothing into connected devices by implanting a small tag into the cuff of a jacket, enabling gesture control for smartphones. Their current partnership with Levi’s has produced the ‘Commuter’ Trucker Jacket, which has been sold in the US for $350 since September 2017. They have maintained the classic denim look Levi’s is known for, leaving no indication the Commuter contains cutting edge wearable technology which has been years in the making – just don’t forget to read the wash label!


A selection of companies making moves in the wearables market:

The use cases for wearables are wide, varying from health and wellness, to fitness and performance, productivity and communication, security and identification, as well as AR/VR. But it is the ability to use wearable technology for payments that will touch almost every aspect of a consumer’s life first.

The latest and greatest isn’t meant to look like a large glistening piece of tech direct from a garage in the heart of Silicon Valley – rather it blends seamlessly in with consumers’ everyday lives.

It is projected that contactless retail payments will exceed $1tn by 2019 (Juniper Research). The popularity of contactless will be aided by huge growth in wearables, where 222.3m units are predicted to be shipped in 2021, up from 113.2m in 2017 (International Data Corporation), making contactless payment capabilities even more readily accessible for consumers. The impact of this trend will leave almost no industry untouched. Here’s what you need to know to prepare yourself.

What’s trending?

Just as mobile payment wallets piggy-backed off advances in mobile phones to take advantage of Near Field Communication (NFC) technology, the same is occurring with smartwatches and fitness trackers. In October 2017, Fitbit Pay launched in the UK with their ‘Ionic’ smartwatch model, partnering with Mastercard and UK challenger bank, Starling Bank. This adds to the list of smartwatches which incorporate Apple Pay, Google Pay, Samsung Pay and Garmin Pay mobile wallets. In these cases, payments capabilities are additional to a smartwatch’s functional technology, which largely focuses on fitness and sleep tracking in the current market. Bucking this trend, we have begun to see a series of partnerships to create specialised payment wearables.

In January 2018, ABN AMRO commenced a proof of concept with 500 of its customers in the Netherlands to test the viability of a contactless payment ring. This follows successful internal testing and a partnership with the creators of the ring, Kerv, which gained early notoriety thanks to a successful crowdfunding campaign through Kickstarter. Then, in February, Folli Follie and Links of London announced a partnership with Visa and the National Bank of Greece to develop and test contactless payments jewellery in Greece.

These developments follow what we have observed with Project Jacquard – the stripping away of a degree of functionality from ‘all-in-one’ wearables, to cover specific use cases, whilst maintaining a core focus on design to ensure the technology seamlessly and inconspicuously integrates into a consumer’s life.

Stripping technical complexity out allows these specialty payment wearables to differentiate themselves on price. The £90 Kerv ring is drastically cheaper than the Fitbit Ionic, which will cost consumers £300 when purchased directly from Fitbit. As design is traded for functionality, even lower price points can be achieved. In October 2017, the Brazilian fintech Trigg released a silicon wristband with an integrated NFC chip for contactless payments which is linked to its mobile application for 49.90 Brazilian Real (approximately £11).

At the same time in Moscow, for commuters, the Metro launched purpose-built payment wristbands and key fobs which can be borrowed for around 400 Rubles (approximately £5), as well as rings which can be purchased for 2,200 Rubles (approximately £28). Such developments have made wearable contactless payments even more accessible to the mass market, which will only add fuel to the growth of wearable payments technology.

The user experience

For the consumer, the attractiveness of paying with their wearables is directly related to the removal of friction from their purchase. We can clearly see the movement away from needing to carry a credit or debit card, or even taking out a mobile phone at the point of sale. Consumers can now just move their hand towards a payment terminal to complete their transaction.

When the payment process forms such an essential part of every customer’s bricks-and-mortar journey, it can’t be ignored, and should be made as seamless as possible. This means, that if you truly put your customer at the heart of your business, understanding how to take advantage of wearable payment technology is no longer an option, it’s a necessity.

So, although the Matrix is still far in the future, it’s pretty clear that through a cuff, hem or watch, businesses now have the opportunity to build closer relationships with their customers. So, what’s stopping you?

Surviving disruption: how fit is your business?

Take the test.