As wearable technology advances, it is taking a back seat to the designs that will have these high-tech features woven in.
This trend is most evident in MasterCard's upcoming "hack" event, a twist on a hackathon that focuses less on technology — MasterCard provides that to all participants from the start — and more on the form factors that will appeal to fashion-savvy consumers.
"Rather than having people write code or program, we're reaching out to students to create new fashion that can be used for payments," said Sherri Haymond, senior vice president of channel engagement for MasterCard.
MasterCard is working with the New School's Parsons School of Design, a New York-based clothing design institution, to sponsor the March 5 "hack" event. There, teams of students will compete for $15,000 in prize money and the chance to showcase their ideas at other MasterCard industry events.
For MasterCard, the key accessory for mobile wallets and wearable computing is tokenization, which protects account data by replacing it with a string of digits called a token.
"When we drafted our tokenization standards, it wasn't just for the giant digital wallet players, we were also going to make if available for other secure environments, such as the Internet of Things, jewelry and wearables, for every device," Haymond said.
MasterCard is also collaborating with digital security company WISeKey to enable contactless payments on Bvlgari and Hublot luxury watches and wearables. At the same time, the card network is expanding its new partnership with Coin to include a developer program to accelerate the integration into wearables such as smartwatches, fitness bands and jewelry.
The Coin program will connect to the MasterCard Digital Enablement Service to digitize MasterCard payment credentials and reduce the barrier to entry for Web-enabled device manufacturers.The card network is collaborating with Coin as part of its “Commerce for Every Device Initiative,” which is also an element of the other partnerships. In the case of Coin, MasterCard hopes to put the full function of a mobile wallet in a traditional plastic card.
“The idea is to add payments functionality to things that are already useful,” Haymond said.
MasterCard considers the WISeKey collaboration an alternative to the payments functions that will be part of more mainstream smartwatches.
"A lot of people may not want a full computer screen for a smartwatch, but they may instead want a luxury brand with some of the aspects of smartwatch functionality," Haymond said.
Facilitating access to wearable payments is a good idea, but the market for such devices still faces challenges, according to Andy Schmidt, a research director at CEB TowerGroup.
"It's a neat idea and I like the trends in terms of making payment more flexible and pulling cash out, but if we're having trouble with mobile adoption, which has a much clearer use case, what does the future for wearables look like?" Schmidt said.
MasterCard is additionally easing access to its digital enablement service for card on file transactions, which is designed to help e-commerce merchants that use a token; and will team with Giesecke & Devrient to enable issuers to access tokens for host card emulation-powered mobile wallets through a cloud server.
"Right now issuers can only get MasterCard tokens by connecting with MasterCard's Digital Enablement Service through us," Haymond said. "It works fine, but issuers also have a very close relationships with chip card manufacturers."
Visa this week also extended its digital enablement service to accommodate the growth of connected devices.
"The use cases for [connected devices] are still evolving," said Thad Peterson, a senior analyst at Aite Group. "So, I'm thinking the [networks] are 'laying pipe' to get ready for that evolution."