Wearables passed the novelty phase some time ago and are now following the money, literally, as COVID-19 keeps forcing the issue of touchless payments, and consumers continue driving demand for ever-cooler form factors to pay (and just do stuff) without physical contact.
Action is heating up on all fronts in this fascinating sector. On Wednesday (April 28) the Munich-based Smart Payments Association (SPA) updated its original 2017 guidance, noting in its position paper Wearable Tech 2021: The Future Is Now that “… wearable payment volumes will have reached $501.1 billion by the end of 2020, accounting for 20% of all proximity payments,” and that “wearable payments increased by 365% between 2017 and 2020, with a quarter of Europeans planning to buy goods and services using the technology in the future.”
While SPA and its members are focused on payments, the fact is that wearables are now imbued with abilities far beyond the normal ring or wristwatch. From medicine to workouts, wearables are realizing their potential to enable all manner of connected economy experiences.
As evidence, witness the Big Tech player that threw down the gauntlet with a wearable mind-meld: Facebook Reality Labs revealed in March that it has developed a prototype wearable capable of reading neurological signals between brains and hands, opening a range of applications including invisible keyboards often depicted as futuristic. And they are.
Telekinetic wearables probably won’t be ready for holiday 2021 gifting, but there are plenty of alternatives available whether you want to exercise, pay, or just be connected and cool.
Wherever, Whatever Wearables
In its updated outlook for 2021, the SPA finds consumers and financial players showing increasing interest in killing checks, dropping cards and paying via super-charged apparel.
“Between 2018 and 2019, Belgian bank KBC conducted a trial in which 1,000 customers were issued with a wearable payment device of their choice from a selection of four — with smart rings, watches, key fobs, and bracelets on offer,” per the SPA. “Six in 10 carried that item on them at almost all times, two-thirds noted that they would consider buying a wearable after their trial experience, and more than half would firmly recommend them to family and friends.”
Not one to miss an opportunity, Apple recently patented a smart ring — not its first, or even the first — with other smart rings already in circulation including the Oura smart ring that records sleep data and the McLear Payment Ring and its RingPay Rewards program, which is not yet available in the U.S.
Apple calls its new ring patent “a self-mixing interferometry (SMI) sensor-based gesture input system,” or, as PYMNTS translated it at the time, “a ring that would be able to sense its position in space in relation to other devices, like an iPad or the Apple Pencil.”
Apple is hardly the only game in town. Google’s controversial acquisition of Fitbit was approved by EU regulators in December, and connected fitness firm Peloton just plunked down big money to acquire three wearables firms for artificial intelligence (AI)-powered hardware and wearables to come.
Which device will consumers choose more? A ring? A watch? Perhaps something we haven’t seen yet, like a payments chip embedded in the cranium? Familiarity may decide early on.
“Projections up to 2027 suggest that wearable payments via smartwatch will outstrip those made via dedicated payment bands by more than 2:1 over that period,” the SPA said, adding, “The key here is not about volumes however, but flexibility.”
Verónica Martin of wearables firm and SPA member Giesecke + Devrient, told the association, “Smartwatches are attractive devices, but they also come with a high price tag that can put them out of reach for many consumers.” Martin noted, “Rings, payment bands, and other wearable payment solutions tend to be much more affordable and will help to drive mass market appeal as well as meeting multiple different use cases.”
Wearing It Well With Convenience And Cool
Wearables proclamations seem to attend the pandemic at every turn, much the way the world finally began taking digital wallets seriously after touching things was declared unsafe in 2020.
Commenting specifically on K Ring tech, the SPA noted that it supports Mastercard and bank account funding, “and allows owners to pay simply by bringing the device to a contactless payment pad or terminal. Powered by electromagnetic induction from the card reader, the K Ring — like any other type of passive wearable — has no need for charging, meaning that users can keep it literally on hand at all times.”
The association also sees considerable promise in wristband payments for entertainment venues and sports stadiums. Form factors aside, there are important considerations for issuers and merchants as wearables are increasingly presented for payment.
“Wearable payments address one need above all else: convenience,” according to the SPA. “Paying for goods and services with a simple flick of the wrist is infinitely faster and easier than by handing over cash, or even tapping in a pin number. And while the difference may be relatively slight, wearables offer greater convenience than even contactless cards and mobile payment apps — removing the need to fumble with a wallet, purse, or phone.”
The upshot is that “as wearable technology grows smarter and more versatile, and as consumer acceptance of new ways to pay continues to rise, the opportunities for issuers will only become more significant.”
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