Wearable payment devices are cutting edge, fast and diverse. But they are not a steady, predictable or popular consumer trend.

Even so, investors see a rich opportunity to get involved in the market for wearables.

"There are going to be [50 billion] connected devices, and if you have an internet connection you can turn those devices into credit cards," said Matt McCooe, CEO of Connecticut Innovations, a Stamford–based venture capital firm that just participated in a $10 million financing round in Dream Payments, a Toronto-based financial technology company that uses the cloud to support a SaaS approach to the Internet of Things.

Matt McCooe, CEO of Connecticut Innovations
Matt McCooe, CEO of Connecticut Innovations

What's interesting about Dream, said McCooe, is its model assumes a proliferation of IoT deployments as companies figure out what types of devices, accessories or clothing connect with consumers. While everything — in theory — can be a credit card, not everything will be used as a credit card.

"One of the problems is you have the technology, but you don't have the use cases," said McCooe.

McCooe has previously invested in IoT and cloud technology, but this is his firm's first investment in a startup that tries to ease deployments of IoT payments in

The market is already filled with a variety of IoT payment ideas. Disney's MagicBand has been one of the most successful deployments, enabling payments, theme park entry and hotel room access. The wristbands reached 50% use in 2014 and underwent an upgrade in 2016. But a similar band didn't work at HersheyPark, demonstrating that even in the same category, the strategy doesn’t have consistent success.

Elsewhere, banks such as Barclays and RBC are engaging in a variety of IoT tests, mostly to see what will stick with consumers.

But even efforts with big backers can have hiccups. Amazon's connected "Go" store, which is designed to allow consumers to shop without a cashier, reportedly had trouble dealing with crowds. For McCooe, Amazon Go is an example of both the possibility and tough evolution tied to connected commerce.

"It's kind of like an EZ Pass," McCooe said. "You go through a toll booth at 55 miles per hour and don't stop to pay. In this case, you're leaving the store without taking your mobile device or card out. There's work to be done to make this type of technology work and there are a lot of companies that want to make it work quickly."

Dream Payments, whose investors also include Toronto technology VCs Real Ventures and FairVentures, will use the new funding to expand outside of Canada to the U.S.

Its tech enables businesses to access cloud-based mobile point of sale technology that works on a wide range of connected devices and operating systems. Dream also has partnerships with TD Merchant Solutions, Intuit QuickBooks and TruShield Insurance.

Dream plans to work with merchant acquirers, which are still grappling with mobile technology, and now have to face the rapid approach of IoT.

"There may be 15 million payment terminals in the U.S., but there may be billions of connected devices," said Brent Ho-Young, CEO of Dream Payments. "Acquirers are looking to see where they fit in."

But even if Dream has the resources and the ambition to expand, will be challenged to find a receptive audience in its new market.

"Dream appears to see an opportunity to expand its efforts into the U.S. market and it has the funding to do so," said Thad Peterson, a senior analyst at Aite Group, who adds the challenge is finding the right spots in the payment system to leverage its value. "There is a lot of smoke around Internet of Things payments right now, coming from nearly every category of service provider and while there's very little fire yet it will be a challenge for Dream to deliver a differentiable and actionable message to the payments community in the U.S."

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