Imagine leaving your bank card at home, purposely. How would you pay for a cup of coffee, transportation, or dinner with friends? Well, thanks to advancing payment technology it is now possible to pay your bill with something unassuming like a keyring, a piece of jewellery, or your favourite watch. Such convenience is no longer future talk; instead, it is a reality that some of us are already living now.
Changing How We Pay
ABN AMRO, one of the biggest banks in The Netherlands, became the first bank in the world to offer tokenised accounts onto passive wearables – wearables without a battery – to their customers. As of January 2019, ABN AMRO customers can choose to not pay transactions under 25 euros with their bank card (or more with a PIN), instead they can pay what they owe with wearables in the form of keyrings, bracelets, rings, necklaces, keyrings, smartwatches, and even watch straps to attach to existing watches.
Bankcard spending is predicted to reach £45B by 2023, an increase that is being helped by contactless payments and wearables being responsible for increasing contactless usage. As we head towards a future where payment wearables will become ubiquitous, banks, like ABN AMRO, are championing brands like LAKS, K Wearables, Olympic, Garmin, Mondaine, and Fitbit. These wearables are being supported by pay tech solutions from UK-based payment enabler DIGISEQ and US-based FitPay, who are utilising Mastercard Digital Enablement Solution (MDES) to complete tokenisation over-the-air. But what is tokenisation?
Tokenisation masks sensitive Primary Account Numbers (PAN) associated with bank accounts with an equivalent surrogate code called a token. This token is less sensitive and restricts access to confidential bank details. It provides a secure data protection infrastructure to match a live bank account to a token that can be provisioned onto a hardware chip. When embedded, that chip can complete financial transactions using the token.
Payment Wearables Evolving Into a Cashless Society
Two years of trials revealed to ABN Amro that 78% of their customers would rather pay with a wearable than a contactless payment bank card. Barclays’ bPay have their range of wearable payment products and collaborated with Topshop in 2015 for new device designs. Wearable tech payment offers great convenience towards increased money portability, decreased the risk of theft, and helps make the experience of
The other side of the cashless society coin is that, at the moment, payment wearables seem to benefit the few rather than the many. It is a consumer who cannot afford a smartphone or who has not been issued a contactless bank card. This is when banks could step in. They have the power to ensure inclusivity reigns and could offer options like a variety of payment wearables at different price-points and affordable payment technology solutions.
As pay tech merchant services continue to liberate us, it is imperative for banks and wearable tech makers to continue to work together. It is this willingness to collaborate that will ensure the consumers will be able to make payments using their jacket, jewellery or simple wristband. There is no denying that such a strong partnership can and will completely revolutionise our attitudes towards both FinTech and Fashion Tech, which makes me wonder when convenience is the name of the game, how can you not be a fan of payment wearables? Either way, we are looking forward to the future of digital payments.