Watch sector will take “years” to corner contactless payments market

MADRID, SPAIN – JUNE 26: Apple Watch is now available in seven more countries (Italy, Mexico, Singapore, South Korea, Spain, Switzerland and Taiwan.) on June 26, 2015 in Madrid, Spain. (Photo by Pablo Cuadra/Getty Images for Apple)

The global value of mobile and wearable contactless payments is expected to reach $95 billion (£67 billion) annually by 2018, up from less than $35 billion (£25 billion) last year.

According to the new research from Juniper Research, the emergence of a range of connected wearables has piqued the interest of NFC stakeholders.

It anticipated that devices such as watches and wristbands would be in the vanguard of these developments, although it cautioned that the sector would take several years to reach critical mass.
The research pointed out that while nearly 9 million Apple Watches had been shipped by the end of 2015, these numbers were dwarfed by NFC-capable iPhones.

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As a result, it said that wearables as a whole would not account for more than 2% of non-card contactless payments by value in 2018.

Furthermore, the research questioned the longer term prospects of wearable devices preloaded with credit, such as Barclaycard’s bPay range, arguing that such devices represented a greater security risk than those linked to credit or debit cards and protected by a secure element.

Meanwhile, the research pointed to a sea change in the NFC ecosystem, with several vendors now following in the footsteps of Apple and embedding secure elements within the smartphone. It argued that this approach further weakened the contactless prospects for mobile network operators, which were effectively being cut out of the value chain.

Although Samsung is the only other OEM to date to launch an own-brand contactless payment service, Xiaomi has filed patents for such a service, while both ZTE and Lenovo have begun rolling out eSEs (embedded secure elements) in selected handsets.

Nitin Bhas, research co-author, said: “Most operator-led pilots and commercial ventures have now closed down. Apple’s entry into NFC gave the industry a much needed boost, and could well be seen as the tipping point for the technology, but at the same time it sounded the death knell for the mobile operator projects.”



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