Royal Bank of Canada has experimented for years in mobile payments, and has come to the conclusion that a simple, single-account wearable like Barclaycard's payment gloves or Disney's MagicBand is a poor fit for the consumer.

Though these devices are little different than the contactless cards and keyfobs many banks have issued in past years, they betray a fundamental rule of customer service: "[If] it's only one thing, it violates our principle of consumer choice," said Jeremy Bornstein, head of payments innovation for RBC, during a presentation at SourceMedia's annual Card Forum and Expo, taking place this week in Chicago.

From RBC's perspective, the future will be better served by multi-purpose devices like the Apple Watch, which can store multiple card accounts and be controlled by the consumer from a Bluetooth-connected smartphone.

Smartwatches, which are often designed to run fitness apps, have other sensors built in to monitor the user's vital signs; similar tools can prove useful as a means of biometric authentication.

RBC is developing a system that examines the user's pulse for biometric authentication, furthering the bank’s position as an ardent supporter of alternative payment methods. By using a pulse rate not related to heart rate, it will mark the first time that RBC will be completely sure the cardholder is present during that transaction, Bornstein said.

Following the precedent set by the April 24 launch of the Apple Watch, “I’m fairly confident that a year from now, not many devices shipping that won’t have payments capabilities,” Bornstein said.

How a payment will work on a majority of wearable devices is not fully clear, but the same could be said of any mobile payment system, Bornstein said.

Apple’s smartwatch will work with an embedded secure element, while Android devices likely will take advantage of Host Card Emulation, Bornstein said. Host Card Emulation technology allows a software application to initiate Near Field Communication contactless payments without use of a device's secure element.

“The RBC PayBand will operate under a SIM card and cloud hybrid,” Bornstein said.

Prior to Apple Pay, many wondered if NFC technology would be vital to mobile payments. But now that Apple is raising awareness, “we are satisfied that this is the future,” Bornstein said. “It’s not just increased convenience, it can change the way we think about payments.”

In fact, RBC is so confident that wearables will become a common payment method that Bornstein makes this prediction: “Next year, we will all be paying for our coffee by tapping our wrists [at the point of sale].”

 

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