Wearable devices have potential as payment tools, but need selling points beyond payments to succeed.
With contactless cards becoming mainstream in most developing markets and mobile payments finally beginning to take off, wearables are being considered as the next form factor for instore payments. Products are pitching a convenient point of sale (POS) experience involving a simple tap of the wrist to pay, with no need to pull out a wallet or even a phone.
The added convenience of wearable payments over other payment options is real, if marginal when compared with contactless cards or mobile payments. However, this added convenience is not enough of a selling point to convince consumers to adopt a payments-only wearable. The two most important drivers for wearable device adoption are the range of features available (cited by 65% of consumers) and price (56%), as per our 2015 Consumer Payments Insight Survey findings.
Consumers have a variety of alternative options at the POS that are familiar, reliable, and don’t cost them anything extra to use. Payments-only wearable devices tend to be at the lower end of the price spectrum compared with multi-functional devices, but they don’t offer consumers anything new, preventing them from being compelling despite the low price. Payment functionality on wearable devices should be seen as a bonus alongside the main selling point of the device (whether that is fitness tracking, ID verification, or timekeeping).
By Samuel Murrant, Senior Consumer Payments Analyst