Wearables forge new payment partnerships, see strong demand

Feb. 28, 2019 | by David Jones

Wearables forge new payment partnerships, see strong demand

Consumer demand for smartwatches and other payment-enabled wearables is continuing to increase as traditional watch companies are working with mobile technology developers to expand the reach of these new devices.

Timex Group earlier this week announced a deal with Hong Kong-based Tappy Technologies to use the company's tokenization chips, which allow users to convert a standard watch into a digital payment device.

The Tappy platform allows users to attach a batteryless chip to their watchband and connect their payment card data to the device using the company's Universal Passive Provisioning Unit.

Tappy CEO Wayne Leung said the tokenization technology lets consumers convert smartwatches and other wearables into digital payment devices that operate without power-consuming batteries and that give them the freedom to choose the payment method they desire.

Mastercard entered an agreement with Stockholm-based Triwa (Transform the Industry of Watches) and Fidesmo to pilot a smart wearable called Tapster, which uses NFC-based technology to enable tap-and-pay for contactless purchases.

Ludvig Scheja, creative director at Triwa, told Mobile Payments Today the company believes that enabling wearables to make digital payments helps make life a little bit easier for customers.

"Also with the Tapster strap they can still use their analog watches and make them a little smarter without compromising the design," he said.

Stjarnurmakarna will be the first reseller of the wearable devices, which will be sold in limited quantities under a beta test. Tapster payments will be available for use by customers with cards issued by Nordic bank SEB, Eurocard and SEB Kort AB. The test will be limited to 250 customers and will be centered around Stockholm, Scheja said.

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In late January, Discover announced an agreement with Garmin International Inc. to provide contactless payments on Garmin Pay, which is available on the lifestyle company's latest watches, including the vivoactive 3 series, and its new running watches, including the Forerunner 645 and Forerunner 645 music, the fenix 5 plus and the D2 Delta Aviator series.

Shaida Lynch, vice president of e-business at Discover, told Mobile Payments Today that wearables continue to be popular for purchases at locations where NFC terminals are in heavy use and therefore continue to trend toward small-dollar purchases.

"Purchases tend to skew towards merchant categories that have been faster to adopt NFC-enabled terminals like supermarkets, restaurants and transportation," she wrote in an email. "So far the merchant categories that have adopted NFC terminals tend to have lower-than-average purchase amounts and wearables transactions follow that trend."

Shipment surge

Smartwatch shipments continue to grow at a rapid pace, with Apple Watch maintaining its leadership in the category, according to a new report from Strategy Analytics.

Global smartwatch shipments rose 56 percent to a record 18 million units in the fourth quarter of 2018, compared with 11.6 million during the year-ago period. Apple Watch maintained a 51 percent share, while Samsung leaped over rivals Fitbit and Garmin to take second place, according to the firm.

Smartwatch shipments reached a record 45 million during 2018, compared with 29.3 million in 2017, the SA report found.

The report included some troubling signs for Apple as the firm is losing share to less expensive rivals. Apple held 51 percent of the market, compared with 67 percent in the year-ago period.

A separate report from Juniper Research showed that dominance by the leading smartwatch makers will shift over the next few years. The report shows that smartwatch shipments will rise to 166 million by 2023, but that Apple, Fossil, Fitbit and Samsung will lose market share to rival firms such as Garmin, Huami and Huawei. In fact, Huawei is projected to have the fastest growth over the period, with a CAGR of 20 percent.

The report also shows that the Far East and China have surpassed North America as the largest markets for smartwatches, with 24 million shipping to that region in 2018 versus 19.5 million locally.

Topics: Contactless / NFC, Mobile Apps, Region: EMEA

Companies: Elan Advisory Services

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David Jones

David Jones is a veteran business and technology journalist, with three decades of experience writing about business travel, real estate and technology.

Since 2015 he covered a range of technology stories for the ECT News Network, which includes the E-Commerce Times, TechNewsWorld, LinuxInsider and CRM Buyer, writing about cybersecurity, artificial intelligence, machine learning, open source computing and privacy issues among others,. He recently covered FinTech issues for PYMNTS.com.

He worked as a staff writer for Bloomberg Business News and an online reporter for Crain’s New York Business. He has written for numerous media organizations, including Reuters, The New York Times, The Real Deal, Continental, City Limits and The Nation.

He was previously awarded the George Washington Williams Fellowship for Journalists of Color by the Independent Press Association.

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Original author: David Jones