Clothes are central to how we present ourselves to the world. They’re now also starting to determine how we interact with it.

In the last year, Australia’s major banks and other institutions have activated wearable payment technology in Fitbit, Apple and Garmin watches; or launched their own silicon wrist bands and payment rings.

Easy-to-use wearable payment devices are on the rise. More than one-in-three Australians (37%) are forecast to own a smart wearable device by 2020 – up from about 14% last year – according to technology analysts Telsyte.

A key driver is the latest technology incorporated into rings, bangles, watches and bands, which no longer sacrifices design for functionality.

“People hear about the Halo Payment Ring and may have visions of a large, ugly device, whereas the reality is that the rings are elegantly simple and unobtrusive,” says Bankwest Executive General Manager of Technology & Transformation Andy Weir, who oversaw the launch of the bank’s Halo ring in January.

“You don’t have to think about grabbing your phone, purse, credit card or cash – you always have the ability to pay at all times, wherever you are.”

Bankwest’s path to the Halo ring began at one of the bank’s Hack Days – a variety of wearable devices were trialled by hundreds of Bankwest staff.

“The payment ring tested higher than any of the other form factors in terms of convenience and the experience for customers,” Weir says.

Australians were amongst the earliest adopters of contactless card payments in the world but have been surprisingly slower to adopt smartphone payments.

“With the rate of payments innovation, we’ll probably be looking back in a few years and saying ‘Can you believe we used to pay using our phones?’”

Payment-enabled sunglasses and suits

The international card schemes estimate that more than three-quarters of all face-to-face payments are now contactless, according to the Australian Payments Network. But while the majority of Australians own a smartphone, slightly more than one quarter (26 per cent) were aware of having contactless payment options on their mobile phone, according to a Mastercard Digital Purchasing Survey.

Weir says it will ultimately come down to individual customer preference but wearable payments certainly offer a seamless experience.

“Phones are great payment devices but do need to be with you and charged to make the payment, while wearables are always with you and the Halo Payment Ring never needs charging.

“With the rate of payments innovation, we’ll probably be looking back in a few years and saying ‘Can you believe we used to pay using our phones?’”
Smartphones may be ubiquitous but they suffer from some of the same issue as cards. A recent Westpac survey of 1,244 Australian adults found that three-quarters per cent of people believe going to the beach is a hassle with cash or wallets – citing security concerns – while more than half have been stuck without money when exercising.

“With the exponential rate of change there’s a strong chance we’ll soon be experiencing biometric technologies superseding today’s payment methods,” Weir says.

The industry has already seen payment-enabled sunglasses (a prototype by Sydney-based fintech INAMO, which produces a key ring and clip) and a suit that has payment technology in its cuff (offered by Heritage Bank, which has since launched its own payment-enabled wrist band), although those devices are perhaps more targeted at attracting headlines than aimed at widespread adoption.

Bus and train payments to drive uptake

Australian Retailers Association executive director Russell Zimmerman is another supporter of wearable technology and currently uses a Kerv ring (the Kerv was also trialled by Bankwest before it opted for its own design).

“I'm a great believer in them,” he says. “I think they will gain traction once we get transit – in particular, NSW transit able to use non-Opal cards.”

Sydney’s Opal card-based transport system should begin accepting contactless payments in the near future after a successful ferry trial with MasterCard. The London transit system, which relied on the similar Oyster card for many years, began accepting contactless card payments in 2013.

“Wearables became far more important in the UK at that point so it will happen in Australia but it's probably not quite there yet,” Zimmerman says.

While the technology is rapidly advancing, the current generation of wearable technology is single chip, with payments being routed through the Visa or MasterCard schemes. Both schemes are more expensive than the eftpos system and retailers absorb this higher cost.

Zimmerman says it remains a question for the future with merchants rarely given the power to select the payment pathway for dual network cards.
Bankwest’s Weir says wearable payments will continue to develop quickly and offer a range of options.
“All things are possible – the Halo Payment Ring is definitely not the end of payments innovation. Whether it’s dual networks, new form factors or bio-metric capabilities – the sky's the limit and things will continue to change rapidly. The ability to adapt and innovate rapidly will be the critical success factor for organisations.”

This article represents the views and opinions of the author and do not necessarily reflect the opinions of BPAY.
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