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Do wearables have a future in the payments market?

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It’s not so long ago that smartwatches were all set to be the next big thing in the consumer tech sector. One of the early innovators, Pebble, attracted so much hype it set a record for the most-backed project on Kickstarter, while the arrival of mobile giant Apple into the sector in 2015 was a sure sign the tech had reached the mainstream.

The gadgets also promised much potential in the growing area of wearable payments. The idea of being able to simply tap your wrist to a terminal instead of hunting around in a wallet or purse for a payment holds obvious appeal in today’s busy environment, where convenience is a primary consideration.

However, a couple of reports from recent weeks may suggest the market for wearables isn’t as buoyant as many in the industry had hoped. Firstly, there was the news that one-time star of the sector Pebble had been taken over by Fitbit, which resulted in the cancellation of development on its next round of crowdfunded gadgets.

Then a report from International Data Corporation suggested sales of smartwatches fell by more than 50 per cent in the third quarter of the year – including a 71 per cent fall for Apple Watch products.

So does this indicate that the smartwatch’s potential for activities such as payments is limited? The answer may be ‘not necessarily’, but for now, it’s likely to remain a niche, ‘nice-to-have’ service for consumers rather than one that’s going to influence an individual’s decision to buy such a gadget.

One category of wearable that does remain popular is fitness trackers, so having payment capabilities on these devices could be useful – being able to pay for low-value items via wearables could be very convenient for people working out who don’t want to carry a wallet or purse with them.

For financial institutions and other fintech providers, wearable technology still has potential, and it’s definitely not something that should be ignored, though for now, it may be up to hardware manufacturers to make the gadgets more appealing before payment providers can take full advantage.

By Jack Dougal

Source: Banking.com

 

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