January 9, 2015
The change in consumer behavior will drive everything, especially in this millennial generation. As merchants start accepting new forms of payments, the consumer behavior will change further. The good news is that this cycle has now already started and the time has come for massive uptake. According to an IBM research report, 50% of the consumers will use 2 or more devices in their purchase process.
It’s the focus on the consumer that is bringing about the change – it’s not a dramatic turn of events, but the result of iterations including lots of failures, and companies painfully and continually changing focus. For last 10 years, digital payments have been trying hard to make in-roads and the current enabling technologies seem to be finally attracting the consumer. Some connected consumers are now automatically expecting businesses to offer alternatives to the traditional cash register, from contactless mobile payments, to payments initiated via wearables.
The Internet of Things
While mobile wallet providers try to simplify the payment process by taking physical plastic cards out of the equation, others are looking further into the future to an era where all things are connected. This is where the concept of Internet of Things (IOT) comes in which talks about the virtual presentation of identifiable objects in an internet-like structure. It has the power to make payments completely seamless and invisible. But the real benefit for payments from the Internet of Things is authentication. Payments experts have already been looking at how using consumers’ devices for cross-authentication can reduce fraud.
The IOT concept is a primary driver behind the advent of wearable technology which is now a growing market with a number of companies developing smart-watches, wristbands, eyewear, etc. These smart devices and tools are witnessing rising adoption among the millennials and furthermore, bringing in new ways to pay. Here are some highlights from the world of wearable-enabled payments:
The payments program offers a wearable in the form of a watch that will conduct phone-free mobile payments. The watch is called LAKS and was recently featured at the ongoing Consumer Electronics Show (CES) in Las Vegas. Thanks to the collaboration with MasterCard, LAKS owners can make payments at merchants’ contactless terminals. Specific to LAKS, MasterCard is offering a chip card which looks similar to a SIM card and has an embedded NFC secure element. When the NFC enabled contactless terminal detects the chip in close proximity, it automatically deducts the amount from the MasterCard account. Watch2Pay, the company behind LAKS is seeking partnerships with major credit card issuers besides MasterCard.
The wearable version of the popular mobile OS brings much promise for payment systems. Payment companies are leveraging this wearable platform to offer customized payment apps for wearables running on Android Wear. Some popular Android Wear devices include Motorola’s Moto 360, LG’s G Watch and Samsung’s Galaxy Gear.
PayPal offers an app for Android Wear which allows users to check-in to pay at local stores, redeem offers, and receive payment notifications on-the-go.
Vesh Ventures launched WearBucks, a dedicated Starbucks app for smart-watches. The app helps users set up their cards within the app and set the default one for payment. After this, simple voice commands can initiate the payment. A user can say, OK Google, start Pay for Starbucks, to make the payment.
This wearable by Qualcomm has a massive app store dedicated to it which has already crossed 5000 apps on offer. Payment companies have leveraged the popularity of Pebble to launch their apps on the Pebble app store.
Wallaby financial Inc offers an app that enables users to access their Wallaby wallet to determine the best payment card to according to the specific situation.
Paypal’s mobile payments app is now available for Pebble smart-watch as well. Pebble users can now check in to stores using the PayPal app. The app creates an auto-generated code for making payments wherever PayPal is accepted.
Beautiful Lab has created a payment app that enables users to pay with your Pebble Smartwatch. The application is powered by LevelUp’s payment platform.
This popular wearable by the tech giant has seen payment companies making use of the Glass’s gesture features and cool controls to offer payment applications.
The Members Group (TMG) offers a Google Glass app called See2Pay which enables wearers around the country to pay merchants using Dwolla. The app streams the Dwolla network straight to Google Glass. See2Pay simply geolocates the Glass wearer, locating Dwolla merchants around them, and allows transactions to be made over the network.
Eaze is another app which uses voice and image recognition to activate the service and a nodding head gesture to confirm and complete the payment. The team behind Eaze started with Bitcoin by integrating existing bitcoin wallets like Coinbase and now plans to add support for currencies like dollars and euros.
Intuit Inc. adapted a version of its GoPayment app to allow Google Glass users to make payments using their smart glasses. The app actually syncs Google Glass with a user’s credit card information and allows making direct payments to a business.
The so-called smart-bands come embedded with contactless technologies to offer perhaps the easiest way to pay. These smart-bands are capable of storing payment card information and thus find usage in payment applications.
Barclay’s bPay - it uses contactless payment technology in Barclays’ credit and debit cards. The bands can be simply swiped by the wearer over a terminal at a shop or a pay point on the bus or the station platform to make a purchase. The bands contain a computer chip and micro-aerial to communicate with terminals.
CaixaBank – the bank offers the Visa contactless wristbands. These bands enable payments of less than 20 euros at contactless terminals.
Disney – under its MyMagic+ program, visitors to the theme park can use wearable, touch-sensitive MagicBands and cards for accessing various areas in the park and for payments as well.