Wearable Payments: Sizing the Opportunity

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The wearable payments market is still very much in its infancy, with most companies in this space still experimenting with form factors and functionality. Apple has emerged as a frontrunner with its payments-capable Apple Watch, but it is far from the only high-profile company in this space. With the market in its current state it is far too early to call Apple’s first-mover advantage decisive, and while this space is likely to see a lot of attention and investment in the coming years it is impossible to predict which companies will dominate.

Scope

• 25% of consumers globally possess a wearable device of any type (regardless of whether that device is capable of making payments).

• Features and pricing are the two most important factors driving purchases of wearable devices.

• China is the most immediately attractive market due to its sizable population and high proportion of potential early adopters.

Reasons to Buy

Understand the players in the wearables market – what products have they launched, and how likely are these to succeed

Find out how consumers view wearable payments as a concept, and how this varies between markets.

Find out where the wearable payments early adopters are, as well as what demographics they belong to in order to effectively market products.

Discover the three key factors to a successful wearable payments product – what do consumers want, and how is this best delivered to them

Eat24
Google
Apple
Samsung
Barclays
Nymi
Disney
Swatch
China Union Pay
American Express
Jawbone
Visa
MasterCard
Ringly
LAKS
Adam Selman
General Motors
Alipay
Xiaomi
Ant Financial
Coin

Table of Contents

EXECUTIVE SUMMARY

The wearable payments market is currently undergoing the proof-of-concept stage, with Apple leading the way

Key findings

Critical success factors

DEFINING THE POTENTIAL

Wearable payments are mainly taking place within the physical proximity of a merchant's POS terminal

Eat24's smartwatch app looks to streamline repeat order purchases

Wearable payments are in the formative stages, with wrist-based devices the most widely deployed form factor so far

Disney's Magic Band provides proof of concept for wearable payments

Wearable payment developments intensified in 2015, with the supply side of the market driving much of the activity

Apple Watch is the first big effort at enabling payments with the wrist

Barclays' bPay range is one of the few examples of payment-only wearables

Most payments players are entering the wearables market through partnerships

Consumer appetite for wearable technology is positive, but a sizable number are unconvinced of its benefits

Wearable device holders are mostly open to the idea of using these devices to pay

Outside the current wearable user base, attitudes to wearable payments are less positive

Features and price are the biggest drivers of wearable device adoption

SIZING THE OPPORTUNITY

Consumer behavior and sentiment are at the heart of our Wearable Payments: Early Adopters Model

The Wearable Payments Early Adopters Model identifies four target groupings for wearable payment products

The banked and younger age groupings demonstrate the greatest early adopter potential

10% of all consumers are ready to adopt wearable payments immediately

China has the largest potential customer base for wearable payments

Wearable providers need to target the highest-potential demographics

The most immediate potential for wearable payments lies within the 25-34 age group

High-income earners show the greatest likelihood of being early wearable payment adopters

Men and women are almost equally as likely to be early adopters of wearable payments

Consumers who regularly revolve all or part of their credit card balance are the most likely to adopt wearable payment technology

STRATEGIC RECOMMENDATIONS

Payments cannot be the only use case of a wearable device

Wearables must be convenient to use and compatible with POS infrastructure

Partnerships are critical to a strong product

APPENDIX

Abbreviations and acronyms

Definitions

Biometrics

Closed-loop digital wallet

Credit card

Currency

Digital wallet

EMV

Mobile payments

Mobile proximity payments

Mobile wallet

NFC

Open-loop digital wallet

POS terminal

Smartphone

Transactors and revolvers

Wearables

Methodology

Interviews with leading payment companies and industry executives

2015 CPI Survey

Secondary research

Bibliography

Further reading

About Verdict Financial

Disclaimer

Table

NA

Figures

Figure 1: Eat24's smartwatch app prompts users about previously ordered items and offers to re-order them at a similar time in the future

Figure 2: The Apple Watch is the highest-profile wearable payments device in the market

Figure 3: Barclays' bPay range includes key fobs, wristbands, and mobile stickers

Figure 4: MasterCard's Commerce for Every Device program aims to connect as many payment-capable devices as possible to MasterCard's network

Figure 5: A quarter of consumers globally claim they own a wearable device

Figure 6: Over 60% of those who own or are interested in owning a wearable device state they would feel comfortable using it to make payments

Figure 7: A third of those aware of contactless payment technology would be interested in using a wearable device to make payments

Figure 8: The features and capabilities of a wearable device is the top driver of wearable adoption

Figure 9: Consumer grouping in our Wearable Payments: Early Adopters Model

Figure 10: One in 10 consumers globally are ready to adopt wearable payments immediately

Figure 11: China, Hong Kong, and India have the highest shares of wearable payment early adopters

Figure 12: Over 200 million Chinese consumers show a very high likelihood of adopting wearable payments

Figure 13: The 25-34 year-old age group is the most ready to adopt wearable payments

Figure 14: More than half of all wearable early adopters are typically high-income earners

Figure 15: Over half of wearable payment early adopters are men

Figure 16: Just under half of wearable early adopters globally revolve all or part of their credit card balance on a regular basis

Figure 17: Income bands as defined for all 2015 CPI Survey-related data

Frequently asked questions

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