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Mark Carter - Skrill

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MWC - Making payments wearable?

07 March 2014  |  2694 views  |  1

With a huge focus on wearable tech at this year’s event, what is the impact on the payments space?

As you’d expect, Mobile World Congress saw some of the most exciting announcements and innovative product launches of the year. In line with Google and Samsung Galaxy Pebble announcements that have ruffled the media over the last six months, the 2014 event saw a huge focus on wearable technology, demonstrating its increasing demand and progress within the mobile space.

One announcement that garnered attention from those attending was the Samsung Gear 2 watch.  Beside it being light and sleek, with health related tools, by far the most exciting new feature to me is the ability to download a payment app, meaning the watch can be used to pay for items across merchants, to redeem offers and to send money to friends instantly and securely. This is just one example of how brands are beginning to focus on making wearable technology even more functional for consumers. 

This is likely to be one of many wearables offering payment solutions. We all want and expect faster, more convenient methods of payment on the move, and perhaps the ease of paying for something using a watch will make adoption natural.

Another big theme at MWC was near-field communication (NFC), the technology that enables devices to establish a connection through touch or proximity. Contactless payments and NFC technology has grown rapidly and, according to the GSMA, more than 355 million NFC enabled gadgets are now in use globally. In light of this, at this year’s MWC  , both Google and Samsung announced  NFC enabled smartphones with fingerprint verification, allowing consumers to pay using their mobiles instead of cards. There were similar announcements from several other handset makers including Sony, which revealed it will be featuring NFC on a smart wristband, two new Xperia smartphones and Xperia tablet, validating the market need for companies to incorporate payment platforms into their offerings.

With huge brands putting their weight behind this technology it is difficult to ignore. But it will be interesting to see if it can compete with Apple’s iBeacon, an emerging alternative that’s more user-friendly than traditional NFC payments. Where NFC requires an object to be in close proximity to a sensor to exchange data, the new iBeacon technology uses Bluetooth low energy (BLE), allowing significantly more data to be communicated over a much wider distance with the phone still in the user's pocket (which makes the act of having to tap a phone against an NFC enabled pad seem somewhat archaic!).

With its user base, market share and heritage for innovation, Apple a strong opportunity to drive significant consumer adoption of mobile payments and encourage other companies to embrace Beacon technology. There may be some use cases where NFC will have a niche but with Apple’s expanding consumer friendly technology, coupled with the penetration of devices in the market, I struggle to see how NFC can win this race.

As I mentioned earlier, for payment technology to become mainstream, the consumer experience has to be such that adoption is “natural” and either aligns with or only slightly alters behaviour. So while I have my doubts that NFC is the future of payments, I expect ‘wearable payments’ are here to stay and will no doubt be an even bigger theme in discussions around mobile technologies and at MWC 2015.

TagsPaymentsInnovation

Comments: (1)

Ketharaman Swaminathan - GTM360 Marketing Solutions - Pune | 11 March, 2014, 15:20

I've long argued (e.g. http://www.finextra.com/blogs/fullblog.aspx?blogid=7772) that the major benefit of contactless card is illustrated by the ability to get past a turnstile at a tube station without having to take out the Oyster Card from the wallet and the wallet from the pocket. Wearable technology will hopefully take this convenience to the next level by permitting multiple contactless cards to be used in the same way. I'm sure smartwatches will retain their battery for days. This would remove a major anxiety - phone running out of juice at the POS - that has stunted the mainstream adoption of mobile wallets. 

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