Banking and payments are making a play to be killer apps for wearable devices, offering the possibility of paying with a wristwatch or glancing at one’s budget through augmented-reality glasses.
However, despite these kinds of apps begin to be rolled out, analysts remain sceptical that wearables will improve consumer adoption of mobile payments.
PayPal this month released an app for the Samsung Galaxy Gear II, a so-called smart watch. Other major companies developing financial apps for wearables include Westpac, Intuit and FIS. Also, startups including Sydney’s Pocketbook are hoping to make a splash by becoming early supporters of the trend.
Even so, analysts say it’s still early days and by no means clear whether wearable devices let alone wearable payments will find significant levels of consumer acceptance.
“Most of these developments are really just extensions of existing applications and programs and intentions to offer some support to a potentially big market,” Ovum analyst Gilles Ubaghs told Computerworld Australia.
“You won’t see any major investment or focus here until the market sees more actual usage numbers.”
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Paying with your watch on PayPal
PayPal is one of the first major payment companies to bet on wearables. The company has released an app for the new Samsung Galaxy Gear II smart watch that works in conjunction with the new Galaxy S5 smartphone.
The smart watch app lets users view their PayPal balance and recent transactions, receive location-based offers for nearby stores and restaurants, and pay in-store by checking in.
When users check in to a store, the merchant can see the customer on a point-of-sale terminal and charge purchases to the relevant PayPal account.
The Gear II app still relies on a connection to the user’s smartphone to work, with PayPal using the Galaxy S5 fingerprint scanner for authentication.
In 2010, PayPal processed $35 million in mobile payments in Australia. By the end of 2013, that had increased to more than $2 billion. PayPal believes that wearable computing could drive the figure even higher because it further removes friction from the transaction, says the company's head of communications in Australia, Adrian Christie.
“We’re going to see a change of form factor in the next five years, not just in how we pay but in how we consume,” he says.
“What we’re trying to do is listen to our consumers and see how they’re adapting. What we think about first is not doing what’s possible through technology but actually thinking about what a consumer would like to do and what will add value to the way they interact.”
While the Samsung watch is the first wearable to receive a PayPal app, Christie says PayPal is device-agnostic and the fact that its digital wallet is in the cloud means that the company can roll out to apps to nearly any piece of hardware.
“We believe in a future where consumers will want to access their digital wallet in many different form factors,” he says. “The goal is to be where the consumers are.”
Next page: St. George Bank and Pocketbook go wearable