The wearable payments market is being 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, according to ABI Research.
In large part, this usage reflects a growing trend in changing consumer behavior 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. As a result of these trends, global tech market advisory firm, ABI Research forecasts US$7.2 billion in global revenue from the sale of payment-enabled wearables in 2024.
A combination of technology maturity, consumer popularity, familiarity with contactless payments, and the unique external phenomena (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, adds the research group. 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 manufacturers, 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. 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.
ABI Research says 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, adds the research group.