Can Wearable s Break the Payments Space?

#Wearables #Payments #

Wearables are huge.

This is because of two things.

One — The Convenience — If I can put all of my credit cards and loyalty information into my wearable I wouldn’t really need my wallet or phone (well, maybe soon anyway). Two — The Security — it’s much harder to steal credit card details from a wearable device. If its provisioned with a payment token that has been authorized at another location (online or phone), no payment details are stored on the wearable.

More and more companies are focusing on this space.

The notable companies are, Garmin, Fitbit and of course Apple, with the Apple Watch. These three and several others have defined a new market that is between a watch, fitness device and payment device. The Wearable industry could be worth a reported $12.44 Billion by 2020, which is only a small part of the overall phone market, but huge for a small device.

However, one of the major drawbacks in the industry is the health sub category (typically the primary use case for the device) which is specifically the healthcare/fitness trackers and smartwatches. The major problem is that the devices cannot completely read the users medical information accurately and subsequently reduce the business case in the market. But, still that leaves the payments option open to lead the way for this market.

Garmin and Fitbit are next in line in the wearable s ecosystem. They are both focusing on the health market, but have the opportunity to break open the wearable payments space. It’s very difficult to make the hardware accurate enough to provide consistent health recordings, specifically based on the users’ pulse and heartbeat. But, still they are making improvements and the market is rapidly growing. Its growing fast enough to reach the 2020 numbers, at some point there will be a convergence the mobile payments ecosystem where, for now is really only restricted to the phone (iPhone being the leader in this market).

I can see these company’s having strategic partnerships with a large bank for Financial Institution or even a wallet provider, like MasterCard or Visa who are looking to grow the vertical in many regions around the world. Because this can add nicely into a software and hardware portfolio and can help gain new customers. It has been rumored that Microsoft has stopped any more development on the Microsoft Band. This leaves an exciting opportunity for other companies to pick up new customer in this space and also make a pivot to the payments wearable s ecosystem.

There are few other parties that are making progress, specifically the payment wearable s space. Inamo Pay (http://www.inamo.com/) — a universal device that attaches to any type of watch via the wrist Band. You can load a pre-paid amount of money on the chip and tap and pay wherever you are. This is small pieces of the ecosystem, but can be universal across all wristwatches and easily integrated into any portfolio of a Mobile Wallet Provider or a Financial Institution that is looking to attract new customers. One Interesting aspect of this device, is that it can only hold one card on the chip, so for a Financial Institute looking to gain traction in this space, there is no fight over who’s card is top of wallet.

It’s about the User Experience. Probably out of all of the ways of paying, from handing over cash at the counter, to swiping a credit card at a terminal to dipping and waving a phone. Using your wearable is the easiest and faster way to pay. The physical movement of your hand (assuming you’re wearing a watch) is the most natural movement and easiest when you’re trying to multi-task at the check-out line.

There are many exiting things happening in the payment wearable space, and the combination of payments, health and well-being and style maybe the winning combination. The future of payments can get an extreme boost if wearable s hits a sweet spot.

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