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MasterCard Inc. expects the first wearable payment devices for use on its network to be available later this year, Sherri Haymond, senior vice president for digital payments for MasterCard, tells Digital Transactions News. The devices are part of MasterCard’s Commerce for Every Device Program, which is intended to add payment functionality to everyday devices consumers use.
MasterCard is providing the platform to which wearable device makers, card issuers, and transaction processors can connect to enable wearable payments. As wearable payment devices become market-ready, device makers are expected to make them available through retailers.
Wearable devices, which include wrist bands, fitness trackers, watches, and clothing, have embedded RFID (radio frequency identification) transmitters that enable consumers to make contactless payments at the point-of-sale. As the notion of making payments with such devices moves into the mainstream in coming years, they could generate significant volume for open-loop payments networks.
“Our platform is an open system that supports a wide range of wearable devices, which allows device makers and card issuers to reach a much broader audience,” says Haymond. “Not every consumer wants to use their smart phone to pay and many consumers want different devices to perform different tasks. Our goal is to make payments a plug-and-play application for makers of wearable devices.”
In March, MasterCard announced a partnership with designer watchmaker Bulgari, which plans to enable its Diagono Magn@sium watch to make contactless payments. The Diagono Magn@sium will be the first mechanical watch embedded with contactless payments technology, Bulgari says. Several smart watches, such as Apple Inc.’s Apple Watch and Samsung Corp.’s Gear, support digital wallets that enable contactless payments at the point-of-sale.
In addition to Bulgari, MasterCard has partnered with other wearable-device makers such as Toronto-based Nymi, which produces a smart-technology wristband that lets consumers authenticate themselves using biometrics, and Ringly, a New York-based smart jewelry maker. “We are seeing a lot of interest from device makers, says Haymond. “As more devices are approved for use on our network, consumers will begin to embrace them. There is already a lot of buzz about wearable payments technology on Twitter.”
Shipments of wearable devices are expected to reach 340 million in 2020, up from 22.7 million in 2014, according to Englewood, Colo.-based research firm IHS Inc. Devices worn on consumer’s wrists, such as smart watches, wrist bands, and fitness and heart monitors, are expected to account for the majority of shipments through 2020, says Don Tait, a senior analyst for IHS and author of IHS’s five-year outlook for wearable devices, which was released in January. Devices worn on the wrist were estimated to account for 91.8% of wearable shipments in 2015, according to the report. Market share for wrist-based devices is expected to hold steady, totaling 91.2% of wearable device shipments through 2020.
“Of the 92 million wearable devices in use today, 11.6 million can be used for payments,” says Tait. “As more open-loop systems supporting wearable devices come into existence, payments made using wearable devices will start to move into the mainstream.”
In 2020, IHS projects 72% of payments via wearable devices will be made through open-loop systems. “Payments will be a key vertical that drives the adoption of wearables, even in closed-loop systems such as Disney’s MagicBand,” Tait says.
Visitors to Walt Disney World who are wearing MagicBand need only tap the device readers throughout the park featuring the Disney Mickey Mouse silhouette to access the park, enter their hotel room, check in for rides, and pay for meals. Disney began testing the MagicBand in 2013.
