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The "Golden Age" of Payment Methods is Getting Even More Interesting

By Bill Camarda

An emerging "golden age" of payment methods is giving individuals and businesses the convenience to pay in more ways than ever, wherever they may be. In recent years, new devices and payment methods have gained millions of users. But innovations like the Apple Watch were just the beginning: Many more innovations have recently arrived or are well on their way.

Watch Out for These New Payment Methods

 

Reaching the growing number of outdoor exercise enthusiasts who might prefer not to carry a wallet, both Fitbit and Garmin are integrating payment capabilities into their newest generation of exercise trackers and smartwatches.

 

Fitbit Pay, built into the company's Ionic watch, enables wearers to add their credit or debit card information and then use the device to complete purchases; it debuted first in the United States and then in markets worldwide.1,2 Similarly, Garmin announced its own digital wallet system, Garmin Pay, first available through its Vívoactive 3 smartwatch.3 Garmin Pay currently supports cards from a wide variety of major issuing banks in 10 countries, from the U.S. and the U.K. to Russia and Australia.4

 

While the first payment-enabled watches generally came from technology companies, there is increasing interest among fashion companies to bring payment capabilities to fashion accessories. For example, Swatch launched the Bellamy watch in 2016, first in China and Switzerland, and then at the summer Olympics in Rio, Brazil. This analog wristwatch sports built-in near-field communication (NFC) that enables payment without an Internet connection; wearers initially could preload it with funds for use at 4,000 Olympic sites.5

 

Swatch Bellamy was an early harbinger of broader fashion industry interest in payments. However, incorporating the diverse technology components of a contactless secure payment solution into fashion-forward devices isn't easy for every apparel or accessories company. Moreover, fashion accessories can't accommodate unnecessary bulk or batteries. Specialized technology firms are helping to solve these problems, making it likely that more fashion companies will enter the market. For example, Fidesmo, for example, uses a passive secure element, similar to the chips now found in most payment cards, to connect cards and other contactless digital services to smart wearables. Since it captures energy from point-of-sale (POS) readers' electromagnetic fields, it doesn't need batteries — helping to keep fashion accessories light and thin.6

 

Fits Like a Glove, Sticks Like Glue

 

Payment-enabled accessories certainly aren't limited to watches. At the 2018 Winter Olympics in PyeongChang, a South Korean company is offering four payment-enabled commemorative lapel pins with embedded values from approximately $28 to $47, as well as payment-enabled gloves that can handle purchases both onsite and with compatible readers worldwide.7 They're also selling prepaid stickers — each thin and flexible enough to adhere to a wide variety of surfaces — that essentially transform anything into a payment device.8

 

Banks around the world are experimenting with diverse wearable payment tech to see what appeals to their customers. For example, Netherlands-based ABN Amro Bank recently invited 500 customers to join a live four-month trial of rings, watches, bracelets, and keyrings, following a series of successful internal tests with staff throughout 2017. By their estimate, up to 50 percent of payments in the Netherlands are contactless, making it an ideal place to pilot contactless innovations.9

 

In October 2017, Australia's Westpac announced PayWear, a line of waterproof and battery-free "tap-and-go" payment accessories from top lifestyle designers, to serve the 70 percent of customers who said "personal style and lifestyle" would be critical to their decisions about wearable payments.10 Also in Australia, Bankwest is preparing to introduce the waterproof Halo ring, which lets customers "fist-bump" the payment terminal and be on their way.11

 

Frictionless Payments from the Road

 

The connected car represents yet another new frontier for mobile payments. Honda and Alibaba Group's AutoNavi division recently partnered to develop services that will enable drivers to immediately make reservations and pay for parking and gas through Alibaba's Alipay online platform, which already serves more than 500 million users in China and beyond. The service is expected to integrate with the AutoNavi mapping and multipurpose car navigation services that drivers can already use to find restaurants, gas stations, and other locations en route.12 Similar applications are being developed to enable drivers to activate fuel pumps and pay straight from their car dashboards, saving time at the pump.13

 

General Motors is integrating a digital wallet into GM's new OnStar Go services. OnStar Go also leverages IBM's Watson artificial intelligence technology to deliver a "cognitive mobility platform" that continually anticipates drivers' needs as they move between activities, places, and brands. For example, if a driver routinely orders breakfast from a fast-food drive-through in OnStar's merchant marketplace, the restaurant can voice-prompt the driver to order items she's purchased before. The driver can then pay en route and pick up her order at the window, creating a nearly frictionless transaction. Over time, data mined from this new payment method is expected to enable companies to make more personalized and contextual offers to drivers.14,15

 

What Tomorrow's Cards May Do

 

For the billions of people who still appreciate the familiarity and simplicity of cards, new advances promise better security and powerful features. For example, one new card contains a cellphone chip and antenna that allows it to exchange data with banks from virtually anywhere, at any time.16

 

This enables many applications. If a card is compromised, the bank can download a new number that works immediately, minimizing disruption to the cardholder's life. The card can display current account and balance information, bank alerts, and even special coupons. If a suspicious card-not-present purchase is made, the owner can be notified immediately and then report suspected fraud. A single card can even replace multiple debit, credit, pre-paid, multicurrency, one-time use, and loyalty cards in EMV, contactless, or magnetic stripe formats: Users toggle between accounts by tapping a button.17

 

The

Takeaway:

New innovations in payment methods are making it easier than ever for customers to pay — from smartwatches, fashion accessories, stickers, automobiles, and remarkable next-generation cards. The data from these new payment methods could enable companies to make more personalized and contextual offers to their customers.

Bill Camarda - The Author

The Author

Bill Camarda

Bill Camarda is a professional writer with more than 30 years’ experience focusing on business and technology. He is author or co-author of 19 books on information technology and has written for clients including American Express Private Bank, Ernst & Young, Financial Times Knowledge and IBM.

Sources

1. Fitbit; https://www.fitbit.com/fitbit-pay
2. “Fitbit Announces Global Availability of Fitbit Ionic …,” Fitbit; https://investor.fitbit.com/press/press-releases/press-release-details/2017/Fitbit-Announces-Global-Availability-of-Highly-Anticipated-Fitbit-Ionic-the-Ultimate-Health-and-Fitness-Smartwatch-and-Fitbit-Flyer-Wireless-Headphones-Built-for-Fitness/default.aspx
3. “Garmin follows Fitbit into contactless payments with the launch of Garmin Pay,” Venturebeat; https://venturebeat.com/2017/08/31/garmin-follows-fitbit-into-contactless-payments-with-the-launch-of-garmin-pay/
4. “Garmin Pay Participating Banks,” Garmin; https://www.garmin.com/en-US/garminpay/banks/
5. “Swatch’s Bellamy NFC payment watch is hitting Rio in time for the Olympics,” TechCrunch; https://techcrunch.com/2016/07/06/swatch-visa/
6. “About Us,” Fidesmo. https://www.fidesmo.com/fidesmo/about/
7. “Visa Introduces New Payment Wearables for Fans Attending the Olympic Winter Games PyeongChang 2018,” BusinessWire; https://www.businesswire.com/news/home/20171108005557/en/Visa-Introduces-New-Payment-Wearables-Fans-Attending
8. Ibid.
9. “ABN Amro moves on wearable payments,” Finextra; https://www.finextra.com/newsarticle/31503/abn-amro-moves-on-wearable-payments
10. “Westpac to work with iconic design gurus for wearable payments play,” Finextra; https://www.finextra.com/newsarticle/31261/westpac-to-work-with-iconic-design-gurus-for-wearable-payments-play
11. “Bankwest Halo,” Bankwest; https://www.bankwest.com.au/personal/payments-services/wearables/halo-nfc-ring
12. “Honda to team up with Alibaba in connected cars,” Nikkei Asian Review; https://asia.nikkei.com/Business/AC/Honda-to-team-up-with-Alibaba-in-connected-cars
13. “A Closer Look At General Motors' Cognitive Mobility Platform,” Forbes; https://www.forbes.com/sites/greatspeculations/2017/01/03/a-closer-look-at-general-motors-cognitive-mobility-platform/#5b3483e17619
14. ”The future of mobility is cognitive,” IBM; https://www-935.ibm.com/services/ibmix/cognitivemobility/
15. “Mastercard Joins Onstar Go, the Auto Industry’s First Cognitive Mobility Platform Delivered by IBM and General Motors,” Mastercard; https://newsroom.mastercard.com/2016/10/25/mastercard-joins-onstar-go-the-auto-industrys-first-cognitive-mobility-platform-delivered-by-ibm-and-general-motors/
16. “Visa and Dynamics Unveil the World’s First Wallet Card,” BusinessWire; https://www.businesswire.com/news/home/20180108006576/en/Visa-Dynamics-Unveil-World%E2%80%99s-Wallet-Card
17. Ibid.

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