There is escalating demand from consumers for easier ways to pay for goods and services. Contactless payments are now the preferred option, with a value set to exceed one trillion dollars this year. However, when it comes to contactless solutions, it is the convenience of payment wearables that is starting to have the most significant impact. Businesses, therefore, need to wake up to the potential that wearables offer and the increasing demand that users have for them.
Why consumers love wearables
For the consumer, the big attraction of a payment wearable is convenience. If you are wearing a payment device, you don’t need to carry a card or a phone and nor do you need to get them out of whatever you’re carrying them in. With a wearable, payment is quick and frictionless. Indeed, a recent survey by Visa indicated that 60% of shoppers wanted quicker and easier ways to pay and that 40% want to pay automatically without even needing to go to the checkout.
Payment wearables remove the effort of using cards and phones as they enable shoppers to pay simply by moving their hand near the payment terminal. With payment being an integral part of the customer journey, businesses cannot ignore the seamless experience that wearables provide. Adopting this technology shows you are putting your customers first and enables you to take advantage of the benefits it offers.
The biggest advantage, of course, is that accepting wearable payments or providing wearables for your customers, enables businesses to cater for the increasing number of consumers who like to use them. The latest statistics indicate there has been a 130% rise in the number of wearables in the last year and some predictions forecast that wearable payments will rise to half a billion dollars by next year.
Type of wearables being used
The key technology used in contactless payments is Near Field Communications (NFC) and this is now being added to a variety of wearable items. The consumer’s incessant desire for smart technology has led to a huge increase in the number of smartwatches and fitness trackers being worn and, in the same way that contactless payments were added to mobile phones, many of these products now offer the same capabilities, giving them a dual role as a payment wearable.
With these products, the ability to pay is simply an additional feature and not the core reason for buying the device. In contrast, we are now seeing a much wider variety of wearables made primarily for the purpose of paying.
One of the main advantages of a standalone payment wearable is that NFC technology is cheap. A smartwatch or a fitness tracker can cost hundreds of pounds, a wearable made purely for payments can be considerably more affordable.
Such affordability has led to two different focuses in wearable innovation. The first is in the manufacture and retail of wearable payment devices for consumers, with jewellery such as bracelets and rings being the most popular. The emphasis here is on creating something that is both functional and on-style that consumers would be willing to pay for. The UK-developed Kerv ring was a pioneering product in this market.
The other focus has been in designing low-cost wearable payment solutions that businesses can provide for their customers or employees. Customers’ preference for wearables over cards can extend beyond the use of debit or credit cards. The Moscow Metro, for example, now provides its commuters with a choice of payment wristbands, rings and key fobs along with the traditional payment card. Indeed, here in the UK, payment wristbands and key fobs, such as those available from Universal Smart Cards, are becoming increasingly used in a wide variety of sectors.
While accepting wearable payments might not be a key consideration for all businesses at present, its rise in popularity cannot be ignored. With retail already facing tough market challenges, smaller companies, especially, need to ensure they do not lose out because they haven’t adapted to the shifts in consumer payment habits. Consumers won’t care if it is a small local business. Even if it offers great in-store experience, an inconvenient payment process at the end of their journey can make them go elsewhere. The ability to pay by wearable gives customers the easiest way to pay and that’s what they will demand.