BOSTON -- New research from Mercator Advisory Group examines how rings, wristbands, watches and other "wearable" items are being used for payments in place of physical and mobile wallets.
In places such as amusement parks, museums and schools, wristbands and other wearable devices are being fitted with contactless chips to enable their use as payment devices, according to the report, titled "The Future Is Not in the Cards: Will 'Wearable Payments' Replace Wallets?"
Acceptance in some cases is limited to a few vending machines located on a particular property. In others, the payment option is accepted by multiple unaffiliated merchants. Some makers of wearable payment devices have made use of MasterCard and Visa's networks to offer an open-loop product that will work wherever contactless payments are accepted.
Other companies have reportedly built wearable payment devices for particular "psychographics." Helping runners, cyclists and other "pocketless" athletes eliminate the need for physical bills and cards was the idea behind one application for wearable payments cited in the report.
The Massachusetts-based payment industry research firm is confident that wearable devices will find a place in the grand scheme of payments, but what remains to be determined is whether they will just serve niche applications like theme parks or find widespread use, alongside cards and cash. Mercator pointed out that while the future of wearable devices depends on the adoption of contactless technology, their uses could also help drive the adoption of that technology.
As with mobile technology, adoption of wearable payments will come in stages that may seem disjointed, the industry research firm predicted.
"With increased contactless acceptance and the right product design, in some contexts, wearable payments may replace wallets -- both their physical and mobile formats," said Ben Jackson, senior analyst of Mercator Advisory Group's prepaid advisory service and author of the report.