Wearable war into the payment industry

In the last months, wearable have tried to surpass their competition by offering their customers to pay using their smartwatch. Mobile commerce is a strongly growing market, which could reach 100 billion USD by 2018. Up to 2% of these would be made through wearables. This is mostly attributed to the fact that consumers feel more comfortable using them for smaller transactions (i.e. subway tickets).

Apple Watch series 2

From the release of its first model in April 2015, Apple implemented its Apple Pay feature in its smartwatches. The latest model, the Apple Watch Series 2, was release in September 2016, and currently costs between 269 to 699 USD. An estimated 9 to 10 million Apple watches were sold worldwide. The upcoming launch of a new model is rumored, that would also feature its own LTE mobile broadband.

Fibit Ionic

Currently only offered online in pre-order at the cost of 299.95 USD, the Fitbit Ionic will be available in stores from October 2017. The company as already dethroned Apple as the second worldwide leader on the wearables market in the second quarter. The Fitbit Ionic strong battery life of 4 days (or 10 hours with GPS active constantly), clearly outlives the Apple Watch and other competitors. Focused on active life, Fitbit also include 2.5 gigabytes of memory in their smartwatch, allowing consumers to bring their music on their workouts, without having to carry an additional device. The health and fitness band leader will also introduce a SpO2 sensor, measuring blood oxygen levels.

The watch has embedded near-field communication chip (NFC). The Ionic watch is the first to offer the Fitbit Pay feature, in a partnership with Visa. Instead of traditional payment information, the Visa Token Service will use a digital identifier to authorize payments. Users will be able to pay using their Amex, MasterCard or Visa credit cards as well as debit cards from top issuing banks in over 10 markets around the globe. In the next months, payments will be gradually accepted from more providers in more countries. A partnership between Fitbit and Starbucks has also been announced, allowing contactless payment with the Ionic watch in North America.

Garmin Vívoactive 3

The latest smartwatch allowing contactless payment was announced by Garmin at the end of last month. The Garmin Vívoactive 3 can currently be pre-ordered and costs between 299.99 to 329.99 USD. This could be a huge competition to Apple, as its thin round esthetics and absence of darkening when idle might appeal to more traditional tastes. Furthermore, its battery life, up to a week (or 13 hours with GPS active constantly), surpasses most of its competitor.

The watch authorizes payments through an embedded NFC chip. Garmin Pay is currently enabled by FitPay, a subsidiary of the smart wallet company NXT-ID. The watch will support Visa, MasterCard and major banks’ credit cards. Unlike Apple Pay or Android Pay, Garmin does not plan on openly advertising their services with stickers at payment terminals. Consumers will be able to recognize the standard Contactless Symbol logo. Payment card accounts will be managed through the Garmin Connect mobile app. Payments will be password-protected. However, the watch remains in payment mode for 24 hours (unless it is taken off), meaning that users will only have to enter their password once per day.

Perspective for the future

NFC payments are becoming more and more a standard feature for smartwatches and fitness bands. While the market share of wearables is currently limited, partnerships and the position taken by large credit card companies could greatly influence the future of contactless payment through wearables.