Wearable payments represent the next step in the migration of payment credentials from physical cards to connected devices. Smartwatches, rings, and other NFC-enabled wearables can give consumers another convenient way to make contactless transactions without reaching for a traditional payment card or even a smartphone.
The KERV payment ring illustrates how wearable payment technology can combine convenience with personal financial management. By linking purchases to a prepaid-style account with an available balance, the device could also help consumers control spending while demonstrating how payment functionality might eventually become embedded in a much broader range of everyday objects.
The migration of payment credentialing to the mobile device has been underway for some time, with the natural progression to wearables following suit. The Apple Watch and Android powered watches have the prerequisite hardware to participate in NFC transactions, and the steady progression to IoT functionality continues. While never stated explicitly in the article, it appears the KERV function similarly to prepaid debit account.
Your Kerv account, which can be set up online, works very much like a debit account. The best part (or worst, depending on your spending habits) is that you’ll only be able to make payments via Kerv if you have enough money in your account. This prevents overdraft fees and burgeoning debts, and may also help in keeping you honest when it comes to your shopping sprees.
The application for personal budgeting is indeed one of the attractive aspects of such a ring. It will be interesting to see how this type of device is taken up in the marketplace. Making it product specific for NFC enabled vending machines could be one brand loyalty application outside of the budget adherence feature. However, at this time, with Apple Pay and Android Pay still slowly gaining traction, these types of payment-enabled devices will see very modest uptake.
The potential of wearable payments extends beyond simply providing consumers with another way to pay. Devices such as payment rings could support budgeting, loyalty programs, transit, vending, and other specialized applications where quick contactless transactions provide meaningful convenience.
However, adoption of wearable payments will depend heavily on broader consumer acceptance of contactless and mobile payment technology. With services such as Apple Pay and Android Pay still developing their user bases at the time, specialized payment-enabled wearables like KERV were likely to remain a niche offering until consumers became more accustomed to using connected devices at the point of sale.
Overview by Joseph Walent, Associate Director, Customer Interactions Advisory Service at Mercator Advisory Group
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