The market for payment-enabled wearable devices will reach US$7.2bn in 2024, “driven by a surge in contactless payment adoption, as a result of growing usage of contactless cards and near field communication (NFC)-enabled mobile payments,” ABI Research predicts.
“In large part, this usage reflects a growing trend in changing consumer behaviour regarding payment habits and trends, driven by maturing smartwatch technologies, evolving tokenization platforms, and the convergence with other end verticals such as ticketing and transport, and fitness and health applications,” it says
“A combination of technology maturity, consumer popularity, familiarity with contactless payments, and the unique external phenomenon (and notably Covid-19, whereby contactless is being pushed as a safe and hygienic alternative to cash by the payment networks, merchants, government and the World Health Organization) is accelerating today’s market adoption of contactless technologies,” the research firm adds.
“Wearable devices are primed to take advantage of this trend, with increasing choice and flexibility in terms of form-factors and available payment methods.”
“Ecosystem players such as wearable OEMs, silicon and IP providers, payment enablers and financial application developers are all working to develop wearable payment experiences that are EMV-compliant, lightweight, interoperable and intuitive UI,” the research firm reports.
“But most importantly, wearable payment technology can easily converge with other applications, such as loyalty and rewards, fitness and health, ticketing and transport, access control etc, offering up new revenue streams and business opportunities for the various stakeholders.
“This can be seen primarily by the growing adoption of open-loop payment systems in active devices such as smartwatches, which are outstripping closed-loop passive devices (such as silicon wristbands) in terms of shipment numbers over the forecast period.
“Regardless of device type, however, increased merchant acceptance and growing consumer adoption serve to highlight the ease and convenience of wearable-enabled payments.”