Vendors, end-users, consumers and the media have been hyping up the potential of mobile and wearable payments for a number of years now. NFC isn't anew technology – and despite the fact that Apple has only just jumped on board and introduced it to its latest iPhone 6 and Apple Watch range - other device providers have been including it as standard for quite a while.
The benefits of making convenient and secure payments, without the 'hassle' of a credit or debit card, are generally quite well understood. The idea of tapping your smartphone, or even a wearable device, on a retailer's terminal to quickly pay for goods or services, does sounds quite appealing.
Consumers buy in to convenience - and mobile and wearable payments sound incredibly convenient. It is also not as if consumers are adverse to trying out new methods of payments, which is evident from the growing popularity of contactless bank cards.
However, despite this, these types of payments don't seem to have yet hit the mainstream. In fact, despite the technology being readily available for years, I don't think I've ever seen anyone pay for anything via their mobile phone – let alone a wearable device.
The reasons for this are varied and complex. On the one hand, consumers may not yet feel comfortable replacing their bank card, and chip and pin, with a smartphone or a wearable device. Which would hardly be surprising given the large number of high profile security breaches that regularly appear in the media.
On the other hand, there are a large number of competing parties involved in making mobile payments work. There's the banks, the payment processors (the likes of Visa and MasterCard), the merchants, the internet giants, the smartphone providers, etc. Getting all of these different players to agree on a standard and a form factor isn't easy, especially given that each of them are competing for a slice of the profit.
However, there has been a slew of announcements in recent weeks that suggest that, in certain markets, innovative payment methods may finally be gaining some traction. Surprisingly, wearable payment examples seem to be particularly popular.
For example, Caixa Bank in Spain has just announced the commercial launch of contactless EMV payment wristbands – allowing customers to pay for goods with the simple tap of a wristband on 300,000 payment terminals across Spain. 'Preliminary volumes' of the wristband are available this summer, but from October the device will be available from all office branches.The band allows consumers to pay for goods up to 20 Euros with a simple tap, whilst higher transactions still need the user to enter a pin. The bank said the device will “add further momentum to this rapid shift towards effortless transactions and shorter queues.”
Philippe Cambriel, president for Europe at Gemalto, the company behind the digital security of the devices, said:
The wearable devices market is booming, with around 70 million units projected to be sold in 2017. In line with this major global trend, CaixaBank's new product launch re-einforces their pioneering spirit, well proven in providing innovative technologies such as contactless cards, mobile services and now wearable devices, so as to always offer their customers the payment method that best fits their needs.
Meanwhile, in London, Barclaycard has launched a contactless wristband that allows commuters to pay for their travel on the Underground. Barclaycard hopes that the wristband will not only make paying for travel more convenient for Londoners, but will also solve the problem of 'card clash', where contactless cards are taking payments from consumers alongside their Oyster cards (the most popular payment method for travelling across the capital).
The bPay bands can be linked with any Visa or Mastercard debit or credit card and will initially be offered to 10,000 commuters. Tami Hargreaves, head of contactless at Barclaycard, said:
Every second counts to Londoners on the morning commute and having to rummage around for your wallet, hunt down your purse from the depths of your bag, or encountering the dreaded red light at the ticket barrier can feel like it’s adding ages to the day.
With bPay band you just hold your wrist to the card reader to pay for your travel, you can then also use it to pay for your coffee on the way into the office, and lunchtime sandwich.
There was also a significant announcement last week for mobile payments in the UK, with Zapp – a digital wallet company that is jointly owned by Britian's retail banks – signing deals with a number of popular high street retailers, including Asda, Sainsbury's, House of Fraser, Thomas Cook and Shop Direct.
The deals mean that Zapp now has the potential to reach more than 35 million customers and is the largest coalition of support for mobile payment technology amongst the retailer community ever announced in the UK. Zapp is in a good position, in that it has the support of most major retail banks and payment service providers in Britain – solving the industry allegiance problem.
For more information on how Zapp works, check out the website here, but it essentially relies on payments that work via secure 'digital tokens'. As well as added convenience for consumers, Zapp also claims that shifting from cash, credit and charge cards to mobile payments could save retailers a significant sum of money each year – with it pushing estimates of around £463 million in 2013, thanks to some research commissioned by the Centre for Economics and Business Research.
Some of the retailers involved voiced their support...
Jonathan Wall, Group E-commerce Director of Shop Direct, said:
Shop Direct are excited to be working with Zapp to make it easy for our customers to pay their accounts online and shop with our brands. Mobile payments are a key area of innovation for us and Zapp are definitely one of the winners in this area.
Andy Harding, Executive Director, Multi-Channel at House of Fraser commented:
At House of Fraser we are committed to delivering the best retail experience for our customers. We believe that mobile payments will be animportant part of this experience and Zapp allows customers a simple, secure and easy to use way to pay for their shopping.
Since Apple changed the game with the iPhone in 2007, there has been culpable excitement amongst the technology community for the mainstream use of mobile payments. This excitement has now extended to wearables - and plenty of vendors and start-ups are fighting to get a piece of the action.
However, as I've said, there has been little evidence to suggest that there is any demand from consumers (or retailers) for the technology. My belief is that debit and credit cards are already 'convenient enough' to not want to make the switch to mobile payments. In addition, there has not been a clear direction provided from the industry about which technology to use, which has made the landscape very complicated (and a little untrustworthy).
That being said, the recent announcements do suggest that the industry as a whole is taking the next step and there are some big name brands on board - but I'd suggest that this is more of a toe in the water, than a dive in the deep end.