For wearable devices like smart watches, the key application on the road to general acceptance is development of convenient forms of payments. New payment options will be therefore added to the existing internet banking solutions and mobile payments via mobile phones.
The technology of digital mobile wallets of various banks, token bank cards, mobile operators and global technology giants has made significant progress, but users are not embracing it at the desired pace. Analysts warn that the user experience is the determining factor of success or failure.
Payments through wearables will reach $95 billion a year by 2018, according to the survey by Juniper Research, which is almost triple, compared to 2015 when the value of the transaction amounted to $35 billion.
The greatest acceptance of wearable technologies is in the younger population, primarily up to 45 years of age.
All this wouldn’t be possible if there was no demand for the devices. It seems that market’s interest in wearable smart devices will not decrease for a while and that end users will buy more goods in this category. IDC predicted that deliveries of smart bracelets, watches, sunglasses and clothes on a global level would reach nearly 102 million units by the end of 2016, representing a growth of 29 percent compared to 2015. Key platforms will be Android Wear and Apple’s WatchOS, but it is certain that there will be other technologies as well, which have yet to come on the market.
Younger Customers Leading the Way
Analysts warn, however, that the acceptance of wearable technology is still at a fairly low level. Smart watches are at about 10 percent, smart bracelets at around 19 percent. The analyses show that the greatest acceptance of wearable technologies is in the younger population, primarily up to 45 years of age. Banks and financial institutions should turn to these customers and their needs that can be easily summarized in three key messages – intuitive user interface, ease of use and transaction security.
Precisely in this segment, with further development of the technology – wearable on one side, banking and security on the other – new solutions will be searched for that will make wearables more interesting for mobile payments as well.
Enabling Payments with Wearables
Therefore, it is certain that in the future we will see more and more mergers on the level of applications themselves. The collaboration of Western Union and Viber is very interesting. They created a system of money transfer using a user interface such as Viber. Furthermore, eIDAS Regulation on Digital Identities (applied in the EU from July 1, 2016) has enabled secure and simpler interaction between citizens, businesses and public administration bodies using digital certificates stored in a cloud.
By 2020, smart watches should take about 52 percent of the market.
This allows for mobility and application of the same digital identity on multiple devices (e.g. laptops, mobiles, tablets, wearables) using the Remote Digital Signature RDS service. All these initiatives show that payment with wearables has a bright future and that entire industry is taking a close look at every development in this specific segment.
Most Popular Wearables
Smart bracelets, like those from Fitbit and Jawbone, currently occupy more than half of the market, while the smart watches at this moment account for roughly 40 percent. This should change dramatically by 2020 when smart watches, according to forecasts, should take about 52 percent of the market while the smart bracelet share should by then fall to 28.5 percent.
According to analysts’ forecasts a steady growth is expected in this particular market segment in the next few years, with average annual growth rates of about 20 percent. All should, IDC predicts, culminate in 2020 with the delivery of over 213 million of different smart wearables.
Sources: IDC, “Worldwide Quarterly Wearable Device Tracker analysis”, Juniper Research, “Contactless Payments: NFC Handsets, Wearables & Payment Cards 2016-2020”