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Mobile and Wearable Payments: Buddies or Challengers

The tech flings with wearables or long term association with mobile? The ubiquity of mobile or novelty of wearables? Whatever the factors be it is clear that both these channels are on their way to become prominent form factors in the payments world. While wearable devices are evolving its perfect use cases, Mobile phones are almost omnipresent globally and already have a mature user and developers market.

Mobile industry already has a plethora of payments mechanisms available for consumers to pay (Pingit, Paym etc.) while merchants to accept such as (iZettle, Square, Paypal etc.). Global mobile payment volumes are expected to be around $431 billion in 2015 and Research firm IDC estimates that the mobile payment market will jump the $1 trillion threshold in 2017.

The more recent launches of Samsung Pay, Apple Pay and Android Pay has almost triggered a war in the mobile payments industry. Apple Pay saw one million card activations within its first 72 hours of availability which clearly indicates the user demand. However, most these new innovations are based around Near Field communication (and even Magnetic secure transmission) standards for POS payments and are likely to face the common challenge of targeting fragmented consumer base which is likely to prevent its mass adoption. Each one just wants their own share of the pie and may not transition into becoming a universal mobile wallet moving customers away from carrying their loyalty, debit, credit, store cards etc. on a daily basis.

Apple Pay integration with mobile apps seems to remove customer experience friction and apprehension for in-app payments but limited to Apple users and heavily dependent on mobile battery life.

These new mobile payment mechanisms are still dependent on mobile telecom providers and merchant POS NFC capability. Samsung Pay seems to be only one which is challenging the traditional merchant barriers of NFC acceptance via its MST technology.

It almost feels like mobile payments needs something that is (a) device independent (b) telecom network independent (c) resolves or has a workaround for mobile battery life.


This is where the Wearable tech payment devices can challenge the status quo.

According to a new report from Tractica, wearable payment transaction volume will grow from $3.1 billion in 2015 to $501.1 billion worldwide by 2020. The market intelligence firm anticipates that, by that time, wearable payments will represent approximately 20% of the total mobile proximity transaction volume and about 1% of total cashless transactions in retail. 

Until recently, Wearable devices were focussed on limited uses like health & fitness, basic alerts etc. Previous generation smart wearables didn’t seem to appeal as lifestyle devices for non-tech crowd or had limited functional capabilities.

With the advent of Apple Watch and latest Jawbone devices (both allowing contactless payments), the wearable payments market just opened up to big possibilities. While the functional use cases have increased, these devices however (a) still have reliance on the buddy mobile phone and (b) thus don’t address the battery life issue.

bPay by Barclaycard UK and imminent Kerv contactless rings are wearables which are addressing both these challenges quite well. Both these devices don’t need batteries and get fired up with NFC contact like any other debit/credit card. Once digital wallet account is set up on associating these devices to banks card accounts, users can freely pay without need to buddy it up with mobile phone or devices.

The challenge with most of these wearable payments devices are that they rely on NFC contactless to be accepted at merchant POS which may not so prevalent outside some of the developed markets.

It looks like the wearable payments are steadily catching up and addressing the niche issues where mobile devices may fail. Bigger question is whether there is enough room for the wearables or it will continue to be a fancy tool which does not appeal to non-tech users.

More to follow…. 



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Manish Kumar


PUMA Consulting Limited

Member since

01 Mar 2013



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This post is from a series of posts in the group:

Innovation in Financial Services

A discussion of trends in innovation management within financial institutions, and the key processes, technology and cultural shifts driving innovation.

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