DigiSeq is aggressively pushing a future of wearable computing, contending that payments should be baked into whatever device the consumer is using, rather than a specific device an issuer directly distributes or chooses to perform financial services.
"It doesn't matter to us, any device that has an [NFC] chip in it can make a payment," said Terrie Smith, a former MasterCard mobile payments executive who founded DigiSeq with Colin Tanner, another former MasterCard mobile payments executive. "Wearables are a thing of today. It can happen now."
The London-based startup just received approval from MasterCard for wearable personalization, which brings consumer payment credentials to the consumer's own connected devices such as watches, bracelets and key fobs.
DigiSeq uses over-the-air (OTA) and over-the-Internet (OTI) functionality to communicate with the consumer's device, and the company adheres to common personalization standards. This allows issuers to deliver payment credentials to the user's wearable device immediately after the consumer purchases the device, rather than having to partner with the maker of each specific wearable or distribute its own.
The process of partnering with the maker of each wearable device which is hindering the market for wearable payments, Smith said.
In one early wearable payments test, RBC was manufacturing its own wearable device, as well as distributing devices built by a partner. Even in that case, the bank expressed a concern over its own involvement in the wearable hardware.
In some closed-loop cases, such as Disney's MagicBand, the company that handles the payment also distributes the wearable device, which is locked to their own systems.
Barclaycard recently began offering a payment-capable wristband for a fee of £24.99, noting that its price is much cheaper than most popular wearable technology. But in other cases, including Disney's MagicBand, the wearable is given for free to existing customers.
"People aren't buying wearables from their financial institution," Smith said.
DigiSeq adherence to EMVCo's standards makes its transactions as safe as any plastic card and interoperable with other card networks beyond MasterCard, Smith said. "They all use the same standards," she said, adding DigiSeq hoped to procure a similar approval from Visa.
By enabling wearable payments under a "bring your own device" model, DigiSeq hopes to bring payments to fitness bands and other web connected wearables that consumers purchase for uses other than financial services. "Consumers can be able to put their own MasterCard payment account onto their own device and go tap happy all over the place," Smith said.
Its technology would also work in closed environments like sporting events, concerts, festivals and other public gatherings. DigiSeq potential customers would be financial institutions.
Other companies are also attempting to provide choice in wearables. PayPal, for example, is supporting multiple wearable devices, while Microsoft's fitness band already mixes in payments by including a Starbucks card app.
The addressable market for all of these ventures is still small, said Jordan McKee, a senior analyst covering mobile payments for 451 Research.
Only 13% of respondents to a 451 survey said they planned on buying a wearable device, with 75% of that 13% saying they planned to purchase an Apple Watch.
"Perhaps unsurprisingly, only 12% of buyers said making mobile payments was an important feature impacting their purchase decision," McKee said, adding long battery life and health and fitness monitoring were the top priorities. "Competing on a value of proposition of payment functionality alone is simply insufficient in the wearables market."