Wearable payments solution? Handle with care

Written by on December 16, 2015 in Guest Blog with 0 Comments

wearable paymentWith a push from this year’s launch of the Apple Watch, wearable technology is at the forefront of many discussions concerning the future of payments. Global wearable device shipments will increase more than 400 percent by 2017, reaching 116m units, up from 27m in 2014, according to Juniper Research. This trend is set to make a huge impact on the payments market, potentially disrupting how consumers pay for goods and services in the next few years.

While the most notable rise in demand for these new solutions comes from consumers, businesses of all shapes and sizes are also interested in finding ways to leverage wearables. A March 2015 salesforce.com survey about the use of wearables in consumer-facing scenarios found that 40 percent of respondents either already used wearables in their business or plan to do so and would be integrating them into the point of sale. This shows the willingness of companies to offer the consumer what is increasingly becoming a priority when transacting, a choice of payment methods.

There is a downside to such a wide-spread adoption however, as the ever-increasing selection of disparate wearable solutions has become something of a double-edged sword and has the potential to cause confusion amongst a company’s consumer base. For now, the majority of media coverage rests on smartwatches such as the aforementioned Apple Watch as well as rival offerings from Pebble and LG, amongst others. However, there is evidence that this will not be the case for much longer as Gartner estimate that by 2017, 30 percent of smart devices will be almost completely unobtrusive which means that we may soon be making payments via jewellery and contact lenses as well as watches and mobile devices.

Consumers may be looking for the ‘next big thing’ in payments, however, they are creatures of habit. The majority will only try out a new payment method if it is being offered to them by a trusted provider (and trust is currently in short supply for many financial institutions). Brand loyalty coupled with the demand for high quality, convenient products, has led to large technology companies to become increasingly established in the production of transactional solutions, besting similar efforts by banks in the court of public opinion. Unsurprisingly, many companies are looking to further cement this lead by leveraging wearable technology. It is now smart, if not necessary, for financial institutions to learn from big names such as Apple, Google and PayPal before they miss out on this lucrative market segment.

The possible move away from regulated financial entities, if banks aren’t fast enough on the uptake of wearables, sets off alarm bells where security is concerned. As with any nascent form of payment technology there are concerns over the security features offered by wearable solutions and, as has become evident with mobile payments in recent years, this can prove to be a huge hindrance to mass adoption.

A poll by Vista Retail Support found that nearly two-thirds (63 percent) of shoppers say security fears would deter them from using wearable technology to make payments and 40 percent say concerns about privacy might dissuade them. These are not figures to be discounted, it is becoming increasingly clear that making robust security a priority is as important to consumers as ease of use, when banking on the success of wearable payments.

With failures in current security methods increasingly dominating the news, concerns over personal data are never far from the modern consumer’s mind. As with all new and exciting technology, many will turn to wearable solutions as a convenient quick fix, but the only way to retain a solid market share and avoid a potentially embarrassing breach as a provider of wearable payments is to prioritize security. The attachment of big brands and promises of intuitive user experience are already drawing consumers towards the adoption of wearables as a means to transact but in the long term, it is investment in security which will decide overall success.

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About the Author

About the Author: Markus Milsted is the Founder and CEO of Omlis, based in Newcastle upon Tyne. With a background in software engineering, music, and, in particular, user engagement, he applies creative solutions and inventive methodologies to Omlis. His vision is for a future where everyone can take advantage of the benefits of completely secure mobile payments. ​ .

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