The Smart Payment Association (SPA) just launches an interesting white paper that explores wearable tech from a payments perspective, analyzes the current market and evaluates the wearable industry’s future prospects.
The rapid adoption of new technologies and innovations is clearly driving a global rethinking of traditional business processes and quality-of-life improvements, which explains the appeal of wearable payment for consumers. The ability to use items worn on the body to quickly and easily pay for goods and services takes convenience to a new level.
Payment ‘on the go’ seems to be the transformational application that captures the public imagination and drives the mass take-up of wearable technologies.
“The fast-paced evolution of wearable payment represents an unprecedented opportunity for the payment industry,” says Sylvie Gibert, President, SPA. “Consumers are hungry for convenient ‘frictionless’ payment solutions that can be combined with a variety of other lifestyle enhancing apps to make everyday life simpler. And making this happen will open the door to the next secure payment challenge – embedding secure payment authentication into connected IoT devices.”
According to Gartner, half the consumers in major markets – including North America, Japan and Western Europe – will be using a combination of smartphones and wearables to make payments by 2018, although there is still a number of challenges and hurdles the digital payment industry will need to overcome if the mass will take up wearable payment technologies, which includes implementing processes to ensure that the personal and biometric data digitally held in multi-functional wearable devices can be revoked the instant these are lost or stolen.
“Connecting issuers, processors, acquirers, device makers and application developers through unified tokenization and provisioning of wearable devices with account credentials is just the start”, SPA stresses, and “the widespread availability of POS terminals capable of supporting a variety of technologies - bar codes, HCE host card emulation, WiFi, embedded secure elements – will be another issue.”
But that’s not all. “With the emergence of new form factors, it’s increasingly unclear if the payment industry or consumer manufacturers are in the driving seat”, SPA questions. Furthermore, there is currently little clarity around the standards that apply to devices manufactured and those created by consumer brands currently tapping into a variety of payment ecosystems.
Anyway, one thing is for sure, the more sensitive the data stored on such ‘devices’, the more tantalizing become the opportunities for cyber criminals and fraudsters. Consideration will need to be given to the personal safety and security issues facing consumers who are out and about wearing their payment device.
SPA’s paper sets out a technology roadmap for stimulating consumer appetite and take up for wearable payment solutions. Furthermore, it highlights how brands and financial organizations try to test the market and adapt payment models to the wearables sector that will need to navigate a complex ecosystem that includes device manufacturers, payment tech vendors, regulators and banks.
Considering that just five years ago, in 2012, Pebble technology Corporation developed the first commercially successful smartwatch, which paved the way for today’s Android and Apple smartwatch devices, wearable tech evolved impressively.
With a plethora of innovations and used in variety of applications, wearable tech is currently an exciting market, many analysts talk about. According to ABI Research, for instance, global wearable device shipments are set to hit more than 500 million by 2021, and it is estimate that 20% of these devices will be ‘connected’ with a payment, transport or access control application.