A report released by market intelligence firm Canalys estimates that more than five million smart watches will be sold in 2014. Debate continues over what exactly smart watches will do, but there are plenty of possibilities. With Javelin Strategy and Research predicting that point-of-sale mobile payments will swell to $5.4 billion in 2018, could smart watches be the device that spurs the mobile payment boom?
In his guest post on VentureBeat, Skooks Pong, SVP of technology at Synapse Product Development, predicts that smart watches are the future of mobile payments. Although some claim that Apple’s rejection of near field communication (NFC) is to blame for the slow adoption of mobile payments, Pong says NFC will work just fine with a wearable device.
Younger consumers, who are spending more than previous generations, are already taken with the tech. Sinclair Briar, an eCommerce analyst with the XK Mobile Solutions, told Mobile Market Watch that shoppers under the age of 40 think of NFC in a positive way and that “mobile payment options are resonating with this group solidly.”
Pong believes in the success of NFC because it’s already here and capable of making mobile payments work. According to Pong, “This is the technology that could take smart watches from cool-kid appeal to the mainstream. It would not only drive widespread adoption of wearables but also drive adoption of in-store mobile payment solutions.”
One of the obstacles for NFC transactions is that it’s just as much of a hassle to pay with a smartphone as it is a credit card. A watch can make this process much easier. Noah Elkin, principal analyst at eMarketer, told CNET, “Tapping a phone instead of swiping a credit card isn’t that compelling. So the industry needs to come up with solutions that give people a reason to use their phone instead of a plastic credit card.”
The advantage of the smart watch is that it’s on your wrist — it’s not an extra device or object you have to carry in your pocket, purse, or bag. It’s not something you have to dig around for when you’re paying at the register. Plus, we’re already used to wearing things on our wrists, a habit Nike and Jawbone are both capitalizing on with fitness bands.
The marriage of smartwatches and NFC technology may be just what the mobile payment industry needs to attract a larger user base. Wrist transactions are faster than a smartphone, more convenient than cash and less likely to be compromised than credit cards. But perhaps most importantly, paying with a smart watch means you’ll never have suffer George Costanza’s wallet woes.