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Well on the way to wearables

By Nick Mackie, Head of Chip and Contactless for Europe • Visa

September 18, 2015

Ten years ago, if you were in a hurry and looking to pay for something, you would have had more reason to feel frustrated. Back then, the check-out experience was often slowed-down by lengthier processes such as signature verification or the last-minute scrabble for spare cash.

Then, in 2007 when the first Visa contactless transaction was made, something changed. That simple ‘touch to pay’ action set in motion a seismic shift in our payment behaviour, as contactless quickly became the new normal. In the last year usage has more than trebled in the UK, while September saw the 180 millionth Visa contactless journey on the TfL network, and 1.5 billionth Visa contactless transaction in Europe.

The contactless terminals that have enabled ‘touch to pay’ card payments now provide the infrastructure for a new era of frictionless payments using mobile near field communication (NFC) technology. Apple Pay’s launch in the US and UK was a critical piece of the mobile payments jigsaw, followed by the imminent US rollouts of Samsung Pay and Android Pay. It’s fair to say that mobile payments finally lived up to the hype in 2015, and momentum is only set to continue as yet more players bring new services to market.

This has all been driven by an incredible consumer appetite for innovative payment options, which is being matched by the growth of Europe’s contactless infrastructure – Visa Europe has mandated that all point of sale terminals will be contactless enabled by the end of 2019, and all account holders will have access to at least one form of contactless payment by the same time. This lays the foundation for the growth of another mega-trend that is steadily growing in

A great fit

Qualcomm president Derek Aberle recently described the wearables market as still being in a period of “self-discovery” as companies try to work out the best combination of features and design to appeal to consumers. It’s generally accepted that mass-market penetration can only be reached when we develop a product that offers real, tangible and ongoing benefits. A product that is – quite fundamentally – useful.

For a perfect example of how well payments can fit into the wearables proposition, take Barclaycard’s bPay wristband, which can be used to make contactless payments in shops, bars, cafes and on public transport with the touch of a wrist. Then there’s CaixaBank’s Pulsera contactless band rollout, and the immediate popularity of Apple Pay on Apple Watch. Wearables take everything that’s great about contactless – its speed, convenience and security – and make it better still.

With wrist-based apps dominating so far, it’ll be interesting to see how traditional watch and jewelry makers respond to the trend long-term, and it remains to be seen which approach will most strike a chord with consumers.

Uniquely wearable

The very essence of a wearable is its physical connection to you at any time, which by nature eliminates friction and improves security. These benefits are further enhanced by biometric verification (for example fingerprint or even heartbeat recognition),which is a natural fit for the wearables proposition.

Then there’s additional functionality like real-time balance updates to help with money management, personalised offers tailored to the individual and predictive balance calculators, which can all be delivered by syncing the wearable with a mobile device. For banks and vendors, this is a powerful way to connect on a more intimate level with the consumer, and could help to fundamentally redefine the bank/consumer relationship.

Collaborate to innovate

There’s a perfect storm right now in the European market, where openness to new payment methods has gained real momentum. The responsibility is ours to seize this opportunity and develop appealing, practical payment options that consumers want to use.

Collaboration is key to unlocking wearables’ potential, delivering the best-designed and most useful products. Whether it’s partnerships between leaders in payments and fashion, healthcare and technology, sports and design – or a blend of all of these – a joined up approach between companies that completely understand their own market is the best way to develop targeted solutions that respond to a need. We’ve already seen a number of one unlikely partnerships creating wearable technologies, like Visa Europe Collab’s recent partnership with fashion designer Henry Holland at London Fashion Week, Intel and Oakley’s smart sports glasses, and Misfit and Swarovski’s shine series.

At Visa, we see contactless technology becoming a standard feature on many wearable devices by 2020, so we’re working with a range of partners to ensure the industry can offer the cutting-edge innovation, simplicity and security that consumers demand. It’s a historic opportunity to ensure that wearables become a very real part of the future for payments. Suddenly, that first contactless transaction way back in 2007 has never felt more significant.

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