Digital payments using wearables devices such as smart watches, fitness trackers, and payment wristbands are an increasing area of focus for industry participants, and consumer acceptance from early trials and deployments has encouraged some of the biggest names in technology and banking to continue their push to drive growth in this nascent market. Wearable payment systems may utilize near field communication (NFC), radio frequency identification (RFID), or quick response (QR) codes and barcodes as enabling technologies, and the contactless point of sale (POS) terminals and backend payment processing infrastructure being utilized for mobile payments are being leveraged to extend payment capabilities to wearables, as well.
According to a new report from Tractica, wearable payment transaction volume will grow from $3.1 billion in 2015 to $501.1 billion worldwide by 2020. The market intelligence firm anticipates that, by that time, wearable payments will represent approximately 20% of the total mobile proximity transaction volume and about 1% of total cashless transactions in retail.
“Wearable payments are just getting started,” says research director Aditya Kaul. “Apple Pay for the Apple Watch is the first big effort at enabling payments with the wrist. Soon to be launched, Android Pay and Samsung Pay are other prominent digital wallet solutions that will support smart watch payments. Key early market initiatives include trials and deployments of Barclays’ bPay system in the United Kingdom, Swatch’s partnership with UnionPay to enable wearable payments, Alipay’s partnership with Xiaomi in China, and Disney’s successful deployment of its MagicBand closed-loop payment and ticketing system at its theme parks, among others.”
Tractica’s report, “Wearable Payments”, analyzes the market opportunity for proximity payments or transactions made physically at POS terminals utilizing wearable devices such as smart watches, fitness trackers, and payment wristbands. The report examines the market drivers and barriers, business models, enabling technologies, and key applications for wearable payments. Market forecasts for wearable payment transactions and transaction volume are provided for the period from 2015 through 2020, and are segmented by device type, technology, and world region. An Executive Summary of the report is available for free download on the firm’s website.