DISCLAIMER: In September 2021 Bankwest discontinued their Halo product line. We have kept factual references to it as it was included as part of the research for this article.
Aussies are becoming increasingly comfortable using wearables to pay, with new statistics revealed by Bankwest indicating a dramatic increase in wearable payment usage over the Christmas period.
So, what does this mean in a wider context? Will we soon be leaving our wallets at home and wearing them on our fingers or wrists instead?
It’s no secret Aussies are early adopters. We just love tech. Where other countries take years to catch up, we catch on straight away. Just take contactless payments as an example. Australia leads the world in contactless payments, with figures showing 92% of all payments made here were contactless in 2018.
Given this ease to which Australians have welcomed contactless payments, it’s no surprise wearable payments – a technology that takes advantage of contactless payment systems – are on the rise here too.
|In fact, according to Mastercard, the most wearable payments last year were made right here in Australia (2). In terms of wearables use overall, Mastercard’s numbers indicated a surge in popularity for wearables, with figures showing that in comparison to 2018, the number of wearable transactions in 2019 increased eightfold.|
While wearables usage may be on the rise, it is a technology that is far from universal. Yes, you may see your Granny updating her socials on her iPhone, but it will probably be a while before she’s sporting an Apple Watch. So, don’t feel bad if you’re wondering what a wearable is.
The term ‘wearable’ really refers to any piece of technology you can wear on your body. This could be a fitness tracker, a smartwatch, wireless earbuds or a VR headset. Remember Google Glass? That was a wearable.
Just like your phone, wearables can accomplish any number of tasks, obviously limited by the type of wearable you opt for. The latest smartwatch, for example, could let you respond to texts, change the music you are listening to, and so much more, while a basic fitness tracker will really only track your fitness.
But we were talking about payments, right? Yep, wearables are increasingly offering the ability to make payments at the checkout using contactless technology, essentially allowing you to tap-and-go, just as you would with your credit or debit card.
|Wearables that offer this functionality come in two types: active and passive. Using an active wearable, such as a smartwatch, you tap the watch on the terminal and verify the payment on the watch itself. Using a passive wearable, such as a ring, you tap the ring to make the payment, then verify it by entering your PIN on the terminal, just as you would when using your card.|
So, what can you expect from your wearable? That really depends on what you want it to do – and how much you’re willing to spend.
As you would expect, the Apple Watch is a market leader. Starting at $649, the series 5 Apple Watch is nicely customisable, offering features that include heart rate and noise level monitoring, advanced workout metrics, audio streaming, contactless payments via Apple Pay, and water resistance to 50m. And the best bit? With cellular built in, you can leave your phone at home.
In terms of ‘hearables’, Apple’s AirPods are perhaps one of the best-known offerings out there, but 2020 is expected to see some interesting advances as others enter the field. For example, with the TicPod Pro you will be able to use head gestures to control music and calls, while Echo Buds allow Alexa to leave the house with you.
While Google Glass may not have hit the highs some predicted, there is still work going on in the world of smartglasses. Augmented reality startup North seems to be the one to watch in this field. Having released its first gen Focals in 2019, now the company is working on second gen, which is expected to be sleeker, projecting a higher resolution display in front of the wearer’s eye (that only the wearer can see).
What about passive wearables? Passive wearables tend to focus on one job rather than many. Take the Bankwest Halo ring as an example. With a chip embedded, this ring is linked to one account – be it a debit or credit account – which allows the wearer to tap and pay at the checkout.
This works in much the same way as Westpac’s PayWear. With a chip secured in a ‘keeper’, it can be attached to a wristband, pin, chain or patch, which can then be tapped on the payment terminal when making a payment. As with the Halo ring, the wearer verifies the purchase by entering their PIN at the terminal.
According to Apple CEO Tim Cook, its Apple Watch is seeing plenty of users new to the wearable category. According to a statement, Cook said 75% of Apple Watch customers during the last quarter were totally new to Apple Watch (3).
So, what’s drawing users to try out wearables, both at Apple and elsewhere? Convenience and increased functionality would have to be the main drawcards in terms of active wearables such as the Apple Watch. But what about wearable payment technology in particular?
Wearables that double as payment devices are simply convenient. Whether you’re popping to the shops or heading out for a surf, you can leave your wallet at home and still buy what you need.
With payment wearables typically doubling as a watch or a ring, these are items you wear without even thinking about it. No need to pick anything up as you leave the house – you’re already wearing your wallet.
Not only that, wearables tend to be pretty durable. Some may be waterproof, while others are built to stand up to everyday use, some even more so than your credit or debit card.
In terms of where you can use these wearables, this is where Australia’s love of contactless comes into its own. Anywhere you can tap-and-go with your card, you can typically tap-and-go with your wearable. Which is pretty much everywhere these days.
What about the downsides? When it comes to smartwatches, price is always a factor. However, for those who opt for passive wearables such as the Bankwest Halo ring, users only need to shell out a small amount to make use of it. (Bankwest no longer offers their Bankwest Halo payment rings to new customers effective 28 September 2021.)
Security can also be a concern for some. According to a recent survey, around two-thirds of Australians (68%) said that security concerns would stop them from using a wearable device to make a payment (4).
|It is worth pointing out though that passive wearables backed by banks tend to offer fraud money-back guarantees to users, similar to those in place for cardholders, and PINs are used on both active and passive payment wearable devices.|
It seems that despite certain concerns, wearables usage remains on the rise. And with the next generation getting in on the act early – 27 million children’s smartwatches were sold in 2018, apparently – wearables may soon become part of everyday life for everyone (5).
In terms of payments, Alan McIntyre, senior managing director for banking at Accenture, expects payments to move away from cards and phones entirely by 2025, to be overtaken by wearables and biometrics.
“Whether it is tapping a ring that you wear or facial recognition, the payment will become more seamless,” McIntyre said in a recent article (6). “The idea of taking the card out of the wallet will seem archaic. What you think of as transactional banking will disappear.” – Alan McIntyre, senior managing director for banking at Accenture
|Indeed, the use of cash continues to decline. According to research based in the United States, most consumers aged 25 to 64 have shown a decline in cash usage over recent years, with the steepest decline among 35 to 44 year olds, who have almost halved their cash usage in the past three years (7).|
This move away from cash towards other options such as wearables will of course be encouraged by the spread of contactless technology. According to Berg Insight, the number of NFC-enabled terminals will more than double by 2022, reaching 112.3 million units. This will mean more than 78% of the world’s POS terminals will be NFC-ready in 2022, up from 50% in 2017 (8).
Added functionality may also embolden more people to slip on a wearable. One of the biggest factors in this is likely to be the ability to use wearables on transit. Just look at the London Underground as an example, which brings in 53,000 new contactless users each day (9).
Transport for NSW seems to have cottoned on to this, having recently announced plans for a new digital version of its Opal transit card. Set up on users’ Apple or Android digital wallet, Digital Opal will allow them to “pay for all modes of transport – whether it be light rail, a bus, on-demand service, taxi or Uber – with a single tap of their phone.” (10)
Fashion will also likely play a part in the growth of wearables. Westpac’s PayWear already offers a designer range of accessories – Centsitive Objects by Hayden Cox – in addition to its basic kit. As for other types of wearables, fashion brands are now jumping on the bandwagon, allowing users to choose wearables not just for their features, but for their form as well.
|As wearables become more attractive – both in form and function – they will begin to appeal to a wider market, to those who perhaps wouldn’t have considered wearing any kind of technology previously. Time for Granny to invest perhaps?|
11. Photo source: Pexels
Pauline is a personal finance expert at CreditCard.com.au, with 8 years in money, budgeting and property reporting under her belt. Pauline is passionate about seeing Aussies win by making their money – and their credit cards – work smarter, harder and bigger.
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