Wearable Technology - The Future Of Payments

Technology is increasingly becoming focused on improving and simplifying user experience. With the advent of smartphones, more and more services are reaching users through apps. One more step in this direction brings us to wearable technology.

The most common examples in wearables are of course smartwatches and fitness trackers. According to eMarketer, 63.7 million US adults will use smartwatches and fitness trackers in 2016, with penetration among US adults is expected to double by 2018, to 81.7 million users, writes Alex Bray, retail channels director at Misys, in an article on Payments Source.

Further adding to this innovation are banks – according to Misys’ research, 15% of banks already have or are currently rolling out wearable apps. 72% of banks say wearables are on their roadmap for the next three years and 66% say proximity payments are the most attractive capability of wearables.

Bray explains that in the future, merchant’s price and customer’s acceptance will be the only mandatory inputs for a transaction. He says that payments-focused wearable technology will improve customer experience on the basis of two key attributes:

“First, wearables can utilise proximity and geolocation to provide protected and convenient transactions. Second, wearables will be able to use biometrics to authenticate users.”

These attributes will ensure that wearable enabled transactions will be faster and more secure than traditional payment options. Bray explains that while geolocation will help to confirm that a customer is in the correct place for the transaction they are trying to make, confirming a customer’s proximity to the correct smartphone will add an extra layer of confidence about customer’s identity. The biometrics capabilities of wearables are still evolving and could take many forms, for example, a form of vein pattern recognition patented by Apple, finger print scanning etc. These will enable the worn device to authenticate a user at all times, providing excellent security for payments.

“As retailers, consumers and banks become more comfortable with the adoption of new technologies, wearables are likely to sound the death knell for cards as wearable optimized payments will rapidly become a necessity for all financial institutions”, Bray concludes.