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Home Fintechs The Future of Payments: Wearable Technology Revolutionising Transactions

The Future of Payments: Wearable Technology Revolutionising Transactions

Introduction: A Changing Landscape of Payment Methods

The way we make payments is undergoing a radical transformation. Gone are the days when the simple question, “How would you like to pay?” had few interesting answers.

Recent years have witnessed the emergence of various innovative payment methods, from smartphone-based digital wallets offered by giants like Apple, Google, and Samsung, to an array of wearable payment devices ranging from smartwatches and Fitbits to jewellery and even embedded chips beneath your skin.

Wearable Payment Technology: A $137 Billion Industry by 2030

The global market for wearable payment technology is set to soar to a staggering $137 billion by 2030. This explosive growth signifies a significant shift in consumer preferences towards convenient and secure payment options.

Let’s take a closer look at the various facets of wearable payment technology and why it’s gaining traction.

NFC Payment Wearables: Convenience Meets Security

Wearable payment devices are more than just gimmicks; they offer fast, convenient, and secure ways to make transactions. Most of these devices rely on near-field communication (NFC) technology, enabling seamless and secure payments.

These payments are processed automatically through secure links connecting the wearable device, payment terminal, and the user’s bank account or digital wallet.

Furthermore, wearable payment devices generate valuable transaction data that banks, card issuers, and brands can use to personalize services. These versatile devices are not limited to payments alone and can be employed for various purposes, including ticketing, access control, and digital identity verification.

Active vs. Passive Wearables: A Closer Look

  1. Active Wearables: Devices like smartwatches allow users to authenticate their identity using the device itself, often through a PIN or biometric authentication.
  2. Passive Wearables: Bracelets, rings, and other passive wearables don’t require charging and instead rely on embedded chips that communicate with payment terminals via NFC. Transactions are authorized in advance through a digital wallet or banking app. Tokenization and encryption ensure the utmost security for payment data and customer information.

The Expanding Landscape: Partnerships and Innovations

Banks, card issuers, and technology providers worldwide are actively collaborating to develop a wider range of wearable payment devices.

For instance, fintech company Curve partnered with wearables specialist DIGISEQ to offer a range of wearables to millions of users across Europe.

Mastercard is also poised to work with both passive and active wearables across European markets in the near future.

Contactless Payment Wearable Devices: A Rising Trend

The adoption of wearables is closely linked to the popularity of established devices like smartwatches and Fitbits. However, there are also specialized payment-focused devices gaining traction, such as Keyble by flywallet.

Keyble is an active NFC payment device secured by fingerprint biometrics and can be integrated into watch straps, bracelets, or key rings. Other notable options include bracelet-based wearables from Neos, OILI, and Paycelet, as well as payment rings from LAKS, McLEAR, and Wayve Pay.

Smartwatches Take Center Stage

Among all wearables, smartwatches hold significant promise from a consumer perspective. The global smartwatch market is projected to grow exponentially, reaching $130 billion by 2030.

Leading brands like Apple and Samsung offer smartwatches that enable payments, while Garmin’s smartwatches utilize the Garmin Pay platform. The convenience of smartwatches is undeniable, offering compatibility with digital wallets and various card schemes.

The Role of Platforms: Fidesmo and Wearonize

Fidesmo, a technology platform for wearables, collaborates with multiple Original Equipment Manufacturers (OEMs) to create a wide range of wearable payment devices, including rings, bracelets, and key fobs. Additionally, Fidesmo works closely with wearonize, the platform behind services like SwatchPay!.

According to Fidesmo’s CEO, regular users of wearable payment devices typically engage in 10 to 25 transactions per month. Among these, rings have emerged as the most popular choice among consumers due to their convenience and accessibility.

Exploring New Horizons: Beyond Traditional Form Factors

Some OEMs are pushing the boundaries of wearable payment technology by experimenting with unconventional form factors. Austrian company LAKS offers a diverse range of wearables, including clothing patches and even a baseball cap equipped for payments.

UK-based DressCode introduces the CashCuff shirt, featuring a removable NFC device in one of its cuffs, accredited by Mastercard. This innovation not only enhances user convenience but also offers a lifeline to individuals with disabilities.

Conclusion: The Need for Inclusive Innovation

As wearable payment technology continues to evolve, it is essential to ensure inclusivity and openness in the global payments ecosystem. Facilitating the participation of diverse brands and form factors in payment systems can lead to a more dynamic and user-centric landscape.

The $137 billion projection for the wearable payment device market by 2030 is just the beginning, heralding a future where transactions seamlessly integrate into our daily lives, driven by the power of innovation and consumer demand.

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