Rise of Wearables in Payments and Banking

Expected to reach $20.64 billion by end of 2022, wearables are here to stay. Not just in healthcare, retail, and telecom, but also in banking and payments. Changing customer priorities and fintech advancements accelerated the market for wearables in the pandemic era. With millennials, gen X, and gen Z consumers wanting secure, convenient, instantaneous transactions, contactless wearables are the way to go.

Projected to grow at a CAGR of 11.5%, the future of wearables is likely to evolve further as consumers and financial institutions transition into the cashless, digital universe. Some wearable payment devices have the potential to become a “one-stop-shop” for several services.

Disney’s Magic Band for instance is a wearable that Disney Land provides its visitors. Designed in the form of a funky wristband, the magic band functions as an access key, a payment device, and a personalized tracker. And it is also compatible with diverse smartphones and technologies.

What are wearable payment devices?

Wearable payment devices are apparel, gadgets, and accessories we use to make contactless payments. The most common types are smartwatches, belts, jackets, fitness trackers, and even rings. They use services like Apple Pay, Samsung Pay, and Google Pay to connect the device with the consumer’s bank account.

Top wearable payment devices in the market

Apple Watch

The Apple Watch is one of the most popular smartwatches on the market, and it features NFC (Near Field Communication) technology. This technology allows the watch to communicate with other NFC-enabled devices, such as smartphones, to exchange data, make mobile payments, and do other contactless transactions.

Jawbone UP4 Fitness Tracker

The fitness tracker Jawbone UP4, supports contactless payments by partnering with American Express. The UP4 is Jawbone’s latest smartwatch, which is water-resistant. So you don’t need to worry about it getting wet.

Samsung Gear G3

Samsung Gear G3 offers contactless payment services through Samsung Pay. It works with Android devices and uses NFC technology and magnetic secure transmission to make payments. The Gear G3 can be linked to a Samsung account to make payments at any NFC-enabled terminal.


Ringly offers rings and bracelets that connects to your phone via Bluetooth. Partnering with MasterCard, they allow you to make contactless payments apart from tracking your activities. They allow you to make contactless payments with just a wave of your hand.

Now we’ve seen only a sample of wearable devices. Belts, jackets, and even shoes are used as wearable payment devices today.

How do wearable payment devices work?

To use a wearable payment device, say a smartwatch, the user needs to link the device to a credit card or bank account. Once the device is linked, the user can make payments by simply tapping the device against a payment terminal. The payment is then processed through the credit card or bank account that is linked to the device.

Wearable payment technologies

Wearable payment systems are quite commonly used in e-banking and payment platforms. They operate on technologies such as HCE, Barcode, Contactless Point of Sale, Radio Frequency Identification (RFID), and Near-field Communication (NFC) to enable payments and cash transfers.

Host Card Emulation (HCE)

Host Card Emulation (HCE) enables payments that are activated by NFC technology. ​​It allows a device to emulate the functionality of a smart card to provide contactless payment capabilities using the ISO/IEC 7816–4 APDU command set. It communicates with a reader and stores data in the same way that a smart card would. A key benefit of using HCE is that it does not require a physical smart card or a built-in NFC reader. And it can be used for loyalty programs and access control too.


Some wearables are encoded with scan-and-go application barcode scanners for payments. It allows the customer to check out quickly without conventional processes. Barcode technology offers several advantages in wearable devices. They are secure, can be read quickly and easily, and can store a large amount of data. Newer barcode standards, such as QR codes can be deeply encrypted to prevent unauthorized access.

Contactless Point of Sale (CPOS)

The contactless point of sale (CPOS) is a new technology that uses Radio Frequency Identification (RFID) technology to communicate with the POS terminal and make payments. The CPOS system is fast, convenient, and secure. You just hold your card near the POS terminal, and the payment will be processed automatically. It uses the latest encryption technology to protect personal information.

Radio Frequency Identification (RFID)

RFID wearables such as rings, wristbands, and dongles comprise an embedded chip with an RFID tag. The tag is a unique identifier that an RFID reader can read. The reader can track the tag’s location or access wearer information. RFID-enabled wearables offer many advantages over traditional ID payment devices. They are more difficult to lose or misplace and can be read from a distance, making them ideal for tracking assets or people.

Near-field Communication (NFC)

NFC ​​ is a short-range wireless technology that enables two devices to communicate when they are near each other, typically no more than a few centimeters. It is a convenient way to share small amounts of data between devices and works great in wearable payment devices, such as smartwatches, fitness trackers, and clothing.

Wearables, IoT, and Fintech

As with many things to do with digital transformation, the pandemic pushed businesses to explore and invest in Point-of-Sale (POS) technology, making wearables more than just useful tools. Readily available and user-friendly in usage and navigation, payment apps such as Google Pay and Apple Wallets, have made it easy for all demographics to transition smoothly into wearable technology.

In the current mobile climate, using the Internet of Things (IoT) in banking is the way to attract new customers and retain existing ones. Wearable payment devices and IoT helps the financial sector to gain deep customer insight and improve user experience. Banks implementing IoT have seen benefits in cost savings, higher efficiency in business processes, and better customer experience. They have also been able to build new revenue models.

There is no doubt that Fintech needs wearables, as it opens up new opportunities to transform their businesses and remain strong contenders in the market. We see the increasing use of wearables and in a way, they may even replace mobile phones in the future.

How wearables benefit banks and fintechs

Access to data

Wearables provide banks access to voluminous data as they are worn by customers most of the time. Customer intelligence gained can be used to enhance experiences and personalize products and services. Wearables are critical to data extraction and analytics.

Personalization of customer service

Financial institutions and fintechs today recognize the need to be customer-centric. And data extracted from wearables have proven to personalize and optimize customer interactions. Wearables can help predict customer behavior through real-time data and target them with recommendations and personalized offers.

Omnichannel user experience

A combination of IoT and wearables can make all the difference in omnichannel customer experience. Fintech and banks can gain a competitive edge with wearables, for example, using smartwatches to make ATM withdrawals and biometric-enabled transactions.

Risk assessment

Banks and fintechs need to mitigate risk by assessing potential factors. Analyzing customer data extracted from wearables can help enhance risk management decisions on lending, or insurance, among many others.

Banking Wearables in India

India is fast catching up in the wearables market, especially after RBI increased the limit for contactless transactions to Rs. 5000. Both SBI and Axis Bank have launched their wearables Titan Pay and Wear n’ Pay, respectively.

Titan Pay

Titan Pay is a wearable collaboration between Titan and SBI that offers watches to enable contactless payments. It comprises a mobile app that allows users to send and receive money instantly. Using the watch and the app, users can transact in multiple currencies, track spending, and even set up a budget.

Wear n’ Pay

Wear n’ Pay devices include accessories like key chains and watch loops from AXIS Bank. It allows you to pay for purchases by just swiping your wrist. The system uses a special wristband that you can wear while you shop. You simply swipe your wristband across the payment terminal to pay for your purchase.

To conclude

The integration of wearable & contactless payments is an emerging trend in the modern payment system. While digital payment trends keep on changing, the need to provide the best consumer experience across the platform is always constant for Financial Institutions and Payment Service providers.

At M2P, we provide the best customizable payment experiences for businesses. Using our end-to-end API stack, we ensure that modern innovations and technology are seamlessly integrated into your ecosystem. Our APIs enable channel management and limit management in PoS, Contactless Payments, Ecommerce, Withdrawal on our Cards Issuance Platform.

Want to know more about integrating contactless payments and other customizable features on your payments platform?

Write to us at [email protected].

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