In July of 2017, the Smart Payment Association (SPA) published Wearable Tech: A Growing Payment Opportunity. With sales of wearables booming, the paper explored the huge potential of a world in which open- and closed-loop payment technology could be integrated into a wide range of smart devices.
From initiatives like bPay Loop and Android Wear 2.0 through to the complexity involved in integrating open loop payments into wearables, the first edition of the Wearable Tech paper sought to provide an overview of the major factors influencing consumer adoption and issuer support.
Four years on, and in the wake of dramatic changes to both consumer technology and the world in general, SPA has revisit some of those issues with a fresh perspective.
SPA wanted to understand how the market had grown, which new innovations had been driving it forwards and, crucially, whether some of the obstacles that had been reported on in 2017 had been overcome.
To aid with that, SPA sought the views of SPA members with their fingers firmly on the pulse of wearable payments. Contributions from companies including Thales, G+D and IDEMIA offered invaluable insight into the new technologies, trends and challenges that define the wearable payments market of 2021.
As wearable technology grows smarter and more versatile, and as consumer acceptance of new ways to pay continues to rise, the opportunities for issuers will only become more significant.
In the last in-depth look at wearable payments, it covered a market on the edge of momentous change.
While closed loop payments – utilised primarily in leisure and entertainment venues like theme parks, music festivals, and sports matches – dominated the wearables landscape at that point, growing everyday use pointed to a more expansive and mainstream future.
Today, there is no doubt that this potential is beginning to be realised. In 2019 alone, the global wearable payments market was valued at $285.47 billion by one source[i], with a CAGR projection of 21.7% expected to drive that to some $1.37 trillion by 2027.
Naturally, a dramatic increase in device sales is behind that projected rise: ABI Research believes that more than 86 million payment enabled wearable devices will have been sold by the end of 2020[ii].
This builds on the explosive growth seen earlier in the decade, with the number of (payment or non-payment enabled) wearables sold rising from 94 million in 2017 to around 121 million just one year later[iii].
CCS, the analyst house behind that insight, believes that this figure will grow significantly again by 2023, projecting sales of around 260 million wearable devices at that time.
All of this would mean little without a corresponding increase in consumer spending using wearables. Here too, though, market watchers believe that momentum is growing.
A study by Visa suggests that wearable payment volumes will have reached $501.1 billion by the end of 2020, accounting for 20% of all proximity payments[iv].
A separate survey suggests that wearable payments increased by 365% between 2017 and 2020, with a quarter of Europeans planning to buy goods and services using the technology in the future[v].
Perhaps most importantly, consumers are beginning to see real value from wearable payments. Between 2018 and 2019, Belgian bank KBC conducted a trial in which 1,000 customers were issued with a wearable payment device of their choice from a selection of four – with smart rings, watches, key fobs, and bracelets on offer.
Six in 10 carried that item on them at almost all times, two-thirds noted that they would consider buying a wearable after their trial experience, and more than half would firmly recommend them to family and friends.
Crucially, while debit cards remained the payment method of choice for the trial participants, wearables followed just behind. Cash, perhaps surprisingly, was relegated to third place.
This paper provides an updated view on the fast-moving wearable payments market, and the actions that issuers need to take today in order to be ready for tomorrow.
[i] Wearable Payments Market Outlook – 2027 – Allied Market Research, July 2020
[ii] ABI Research – Q3 2020
[iii] Optimistic Outlook for Wearables – CCS Insight, 20 March 2019
[iv] Paying with wearables: The next big thing in IoT – Visa Innovation Blog
[v] Wearable payments are taking over Europe – Printec, 16 January 2020
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