The payments ring—don’t leave home without it. This might be a slightly recycled slogan by providers of wearable payment devices. As the following Wall Street Journal article describes, a payments ring is getting some attention in Australia.
“Buying beer at his local shop recently near Melbourne, Australia, Ashley Leahy advanced on the cashier’s desk and made his hand into a fist. He wanted to pay with the ring on his finger. So, naturally, he held his knuckles up to the shop’s payment-card reader. The cashier “thought it was some sort of scam,” says Mr. Leahy, 32, who works for a market-research firm. “He looked down at my ring and my hand, and was like, ‘What are you doing?’ ”
Mr. Leahy received the ring from Australia’s Bankwest, which instructed him to make a fist as if knocking on a door. The payment went through, satisfying the befuddled cashier. Mr. Leahy got his beer. Customers are paying with rings, watches, bracelets and key rings in a trial this year in the Netherlands by Dutch bank ABN AMRO Group .Barclays PLC has a wearables service in the U.K., which, along with options such as key fobs and wristbands, offers stickers customers can use to turn almost anything into a payment device. Mr. Leahy’s ring can link to a debit or credit card and uses technology similar to the tiny antennas in “contactless” bank cards that users tap on card readers.”
Wearable payment devices are not new, but have been coming into their own more recently. American Express and Visa have brought out these handy payment devices at venues such as the Olympics and the U.S. Tennis Open. Apple just introduced the latest version in its watch line that has had a payments capability. So this brings back the familiar discussion about contactless payments. Why haven’t they caught on in the U.S., as they have in Europe and Canada? Certainly U.S. transit systems have been early adopters and commuters have begun accustomed to tap and go. Various retail gas brands have introduced them as well. When it comes to the basic POS checkout, consumers are used to just pull out their plastic to swipe or insert into the terminal. But wait—there are contactless U.S. credit cards in the market, so why not more widespread adoption? The simple answer is the manufacturing cost to the issuers that have just undergone the EMV transformation, plus only about half of U.S. merchants have contactless enabled terminals. We will see more contactless cards and wearables in the future, but this will be a slow multi-year growth curve.
Overview by Raymond Pucci, Director, Merchant Service at Mercator Advisory Group