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Can wearable devices push aside smartphones for mobile payments?

As mobile wallets continue to struggle to find adoption through smartphone applications, some are now looking to wearable devices for more efficient and secure payment mechanisms.

With the first native Google Glass payments app coming to market, the wearable device is surfacing as a possible mechanism for mobile payments. However, there are still many challenges that need to be dealt with before the market is totally upended.

“I think wearables, and more specifically what I call the wearable wallet, are far more interesting as a payment method than a mobile phone,” said Drew Sievers, CEO of mFoundry at FIS, Larkspur, CA. “With no carrier involvement, and a lower unit cost, wearable wallets will encounter far fewer hurdles for innovation.

“Wearable wallets via things like buttons, rings, cuff links and bracelets are items that can always be on your person and are easily accessible,” he said. “So, they can be a faster, more convenient way to pay.

“A wearable wallet can still be linked to your mobile phone for security, reloading, balance inquiries, etc., but they will be liberated by not having to rely upon integration or support with a mobile carrier.”

Google Glass payments
Wallaby Financial, a company that helps consumers get the most out of their credit cards, has just released an app for Google Glass, becoming the first native Google Glass app to support real-time financial decision making.

The Pay With Wallaby Google Glass app lets consumers input all of their credit and debit cards into one location and have the app advise them on which card makes the most sense to use in any given time. After installing the app, consumers simply say, “OK Glass, Pay With Wallaby”, and the app will suggest the best card to use.

The idea is that the app helps consumers maximize the rewards they get from payment cards.

Wallaby already offers this app for Apple and Android smartphones, but with the Google Glass app, consumers will be able to leave their phones in their pocket and simply speak to the device.

The Google Glass app does not directly offer payment capability yet, but the company is working on it, per Matthew Goldman, founder/CEO of Wallaby, Pasadena, CA.

“The hard part about this is merchant acceptance,” Mr. Goldman said. “It is clear that there is a path involving the camera in the path, but we’ll need to work with point of sale companies to drive acceptance.

“We’re working at the front-edge of wearables and accept that developing is a bit harder now, but we think it’s the right long-term direction to be on,” he said.

While this app does not directly make payments just yet, others have been experimenting with wearable payment technology.

“I have had a watch which can make contactless payments from a pre-paid debit ‘card’ within it for about three years and there are wristbands that offer similar capabilities,” said John Devlin, practice director of smart cards, payments, ID, transportation, SIMs, NFC, RFID and Authentication at ABI Research, London.“With NFC this tech could spread from smartphones to other wearable products which may be standalone or tethered via Bluetooth to your primary device.”


Glass challenges
Needless to say, there are still many difficulties with creating a payment mechanism via Google Glass.

For one, the device is still not available to the public, and it is expensive. Additionally, the aesthetics have turned many consumers away.

“Aside from being pretty goofy looking, Google Glasses are an extraordinarily expensive item to own,” mFoundry’s Mr. Sievers said. “It’s hard to see how, at least in the near term, Google Glass would ever be able to garner the adoption levels needed to make it a viable payment method.

“It’s much more likely that a combination of lower cost items like rings and bracelets will allow for the rapid scaling of Wearable Wallets,” he said. “In fact, it’s more likely that an Apple iWatch would drive alternative payments than Google Glass.

“After all, most people would probably rather sport a cool, Apple-designed iWatch than find themselves looking like Geordi La Forge on Start Trek.”

Google Glass also poses the same security risks that smartphones do.

“Google Glass is still prohibitively expensive and ‘techy’ for most everyday consumers, making it a challenging device if the goal is mass adoption of wearable payments,” said Mike Santoro, president at Walker Sands Communications, Chicago.

“As far as security issues go, any payments technology is only as safe as its device,” he said. “Google has features to protect user data, but with all of the recent breaches, there are also questions of how safe any device is from hackers.”

Wearable technology
Google Glass may not be the simplest choice for payments, but perhaps other forms of wearables would in fact be an improvement to smartphones.

One interesting wearable device is the NFC Ring which could be tapped to a reader to make a payment. This could add efficiency and convenience for consumers, per Christian DeFeo, wearable technology expert at Newark element14, Chicago.

Combined with other technology, be it NFC or Bluetooth, wearable devices could totally redefine the in-store checkout experience.

“Looking to use wearable devices for mobile payments is exciting because it creates a seamless in-store experience,” said Drew Giovannoli, marketing and operations manager at Fosbury, Austin, TX.  “Imagine eliminating lines because no transactions were required.

“If products are scanned or tagged with bluetooth, wearables could literally check out as you leave the store,” he said. “This would be incredibly powerful if paired with iBeacon alerts at product shelving and store entrances.

“Wearables could enhance the payment experience because it can eliminate customer friction. For there to be success in the market, there has to be wide spread adoption and excitement – but I believe we’re close as Google Glass is popularized and stores look to differentiate.”

Yet the question of technology still remains in limbo with NFC and Bluetooth each proposing different challenges and benefits.

“If Glass was to become the payment mechanism it depends on the technology behind it,” ABI’s Mr. Devlin said. “NFC would not be practical as it is designed to have a short range and so you would have to remove and tap your Glass, which I don’t think people will want to do.

“This leaves you looking at something like Bluetooth as well or non-proximity wallet or account where you can click and buy and the payment is processed and accepted remotely,” he said. “As it stands I am not aware why Glass should be any more vulnerable than a smartphone although I am seeing greater consideration of both hardware and software security solutions in smartphones and I do not know if this will carry over to wearables.

“Glass is not designed with security at the forefront and so it may have more vulnerability – there was news last year that it could be spoofed by malicious QR codes to connect to other networks – and this could potentially be exploited if payment applications are not carefully implemented and managed. If this is done properly then it is a case of ensuring that the consumer experience is worthwhile.”

However, just as is the question with smartphones, the success of the technology relies on retailer and consumer adoption.

“From the videos relating to the Wallaby app, it appears to replicate what can be done on a smartphone but without the ability to pay from the device itself – that will be the major challenge, combining the technology to deliver the user experience,” Mr. Devlin said. “The next challenge will then be to get retailers onboard.”

Final Take
Rebecca Borison is editorial assistant on Mobile Commerce Daily, New York