Payments' future in wearables is promising, but if one thing is clear already, it's that banks have no business designing fashion accessories.
Current wearable payment implementations, such as the Barclays bPay wristband, are decidedly conservative in their design. Some companies, such as Intuit, have already seen the value of drawing inspiration from one of the few successes in the tech industry's forays into fashion: Fitness tracking.
This is a market that Fitbit arguably dominates, and with the purchase of Coin's wearable technology assets announced May 18, Fitbit will soon be able to flex its payments muscle.
But it's still an open question as to whether fitness and payments will be a winning combination.
Only 3% of fitness band owners say they wish they could add payment capability to their fitness band, the results of a survey 451 Research conducted in October 2015 suggest.
“Demand for this type of experience from consumers has not manifested itself in the market yet,” said Jordan McKee, a senior analyst at 451.
Apple Watch has long supported Apple Pay, but only 10% of prospective smartwatch owners say the ability to make mobile payments is an important influence on their purchase decision, he added. Sixty-two percent of survey respondents cited the security of personal information as a top concern with wearables, according to 451.
Perhaps realizing this, Fitbit said in its announcement that it would not add contactless payments capabilities to its devices this year. This is even new territory for Coin — the vendor's original idea in late 2013 was to consolidate the clutter of payment and loyalty cards in a single device that would fit in a consumer’s wallet.
But Coin was one of a slew of multi-account cards from the likes of Stratos, Swyp and Plastc that were forced to adapt to the rapidly changing payments ecosystem — particularly the shift to EMV security — before their products could take off.
Coin made a fresh attempt at a broad mobile payments play early this year, forging a partnership with MasterCard, which vowed to use Coin’s NFC-based mobile payments technology to power an array of wearables as part of MasterCard’s Commerce for Every Device initiative, angling to leverage the emerging Internet of Things. According to MasterCard, that partnership is still in place.
“We look forward to continuing our work with Coin, and other partners, to make every device a commerce device," MasterCard said in an emailed statement. "While we did not play a role in the (Fitbit) deal, we are supportive of it and the industry’s continued momentum to bring payments capabilities to consumer wearables and IoT devices.”
In acquiring Coin’s technology, Fitbit sees a way to enhance its sales, which are still strong but facing growing competition from other smartwatch rivals, McKee said.
“Coin’s collaboration with other smartwatch makers including Chronos, Omate, Atlas and Moov presented a potential competitive threat to Fitbit, and by acquiring Coin’s developer program, Fitbit has eliminated that threat,” he said.
Fitbit declined to provide comment for this article.
Adding a mobile payments feature could be a shot in the arm for Fitbit, said Brian Riley, principal executive adviser with CEB TowerGroup. With revenue approaching $2 billion, Fitbit is a leader in the fitness-tracker niche, and adding Coin enhances Fitbit’s “long-term play” in product design, Riley said.
Wearables and payments have a long way to go, Riley said. “It will take a long time to fully displace the physical payment card,” he said, noting that it may take a decade to see wearable payments technology become widespread.
There is still time for banks and other payment companies to respond to Fitbit's purchase of Coin's wearables assets.
Visa and MasterCard have both courted developers and fashion designers to incorporate their payments technology into jewelry. In addition to Barclaycard's bPay band, the bank has experimented with gloves, jackets and other form factors.
Microsoft Band, largely a fitness product, shipped with a Starbucks app that enables users to purchase coffee by displaying a bar code on the wristband's small screen. Disney's MagicBand is given to theme park patrons for park and hotel access, but it also functions as a contactless debit card.
Coin still retains its card-based payments technology, but with the sale of assets to Fitbit it could mean changes for some of its former partners in smartwatch payments. Atlas Wearables was one of the wearables companies planning payment products as part of the Coin-MasterCard partnership, but those plans are now in limbo, an Atlas spokesperson said. Coin did not respond to queries.