Fast payment processes to be revolutionised by the smartwatch – a wallet on your wrist
Toothbrushes with internet access, self-driving cars and household robots: the Internet of Things is moving ever closer and is already exerting more and more influence on everyday life. Smartphones and tablets have long become our closest personal companion. This has changed the way we pay: in its digital form, money exchanges hands quicker and more efficiently, whether from customer to merchant, person to person or continent to continent. Consumers will soon pay ‘on the go’ with a mobile wallet – not necessarily on a smartphone; it could be in the form of wearable technology.
The Gartner market research institute expects the wearable computing market to increase to 90 million devices by 2016. In Germany, too, the amount of wearable technology continues to increase. Just in July of last year, a study by the Global Mobile Forum revealed that 96% of the German population see wearables as a “gimmick”. Yet by March of this year a study by PwC revealed that 17% of respondents own a wearable and among those, 76% are satisfied.
Apple Watch: taking wearable payments one step further
This shows what was once used in hotels and at festivals will soon be seen in supermarkets, public transport and beyond. Because wearables are worn directly on the user’s body, they can immediately pay for and redeem their ticket using near field communication (NFC) technology, while also receiving route information and departure times to their device. It is this ability to marry application scenarios and functionality that has made wearable technology so successful – it serves so many purposes: payment, couponing and loyalty point programmes, ticketing and more.
With Apple Pay available on the Apple Watch, a key player in the field of wearable payments is active in the USA and Great Britain. This solution also uses NFC technology, the standard for contactless data transfers. Further hardware manufacturers and operating system providers will follow this example. Manufacturers of fitness armbands are also integrating payment functions into their products. Even traditional watchmakers are bringing the first models with payment functionality to the market. The revolution is fully underway.
As a result, users can now make cash-free payments, for example at the gym or when jogging, without the need for a bulky wallet or even a smartphone. Users have everything they need, readily available on their wrist. To make a fast, contactless payment the user simply needs to hold the mobile gadget over the relevant NFC payment reader.
Wearable technology has the potential to connect sales channels
Payment wearables accompany the consumer throughout the customer journey. The wearable, internet-based devices have the potential to bring together online/mobile sales channels and the physical retail trade. Features including geolocation and tracking, mobile couponing, access authorisation and push notification services are all made possible by state-of-the-art wearables. The technology has long surpassed the simple fitness tracker – the wearables market now also includes smart clothing, glasses and intelligent medical innovations.
Payments are beginning to play a key role in wearable technology. According to a recent study by Fittkau & Maß, 35% of wearables users are already interested in making mobile payments using wearable technology.
Mobile payment encourage impulse buying and speed transactions
The advantage of combining wearables with payment processing is clear. The payment process is quicker, easier and more secure for consumers. A mobile wallet worn on the wrist means that customers no longer need to hunt high and low for change or their credit card. A simple hand movement is all that is necessary to make a payment, particularly for smaller amounts. Furthermore, users have real-time access to their transactions. Additionally, mobile payment methods also encourage impulse buying and speed up transactions. Loyalty and couponing functions increase customer retention.