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How wearables will shape the future of mobile payments

Al Sacco | June 1, 2015
Three finance executives discuss the essential role wearable technology will play in the evolution of mobile payments.

"Data analytics will be huge," Wyper says, because it will let payments companies "take all the information that's collected and turn it into useable insights. The future [of mobile payments] might be predictive based on context, so if you always use the same service in a location, it might be able to predict which to use when."

For example, if you frequently work in Manhattan, and you always use your corporate credit card while in New York City, it could be automatically served up a payment option on your smartwatch when you arrive at your favorite bar or dining spot, based on your location and past behavior.

Today, payment companies mostly request data about customers, and they then enter as much (or as little) information as they're willing to share into mobile apps or websites. In the future, wearables and other devices will automatically collect data (after users opt in) and deliver relevant, contextual information. It will be "less of a pull and more of a push," Moody says. 

Challenges for wearables in mobile payments

Wearables can improve and extend the payment process, but there's also a balance between ease of use, or "friction removal," and the need to provide all information necessary to make informed financial decisions, Moody says.

"You have to balance reduction of friction with the need to make people understand the process," Moody says. "People today spend money without even thinking about it. By removing friction, you take the customer away from the tangibility of cash."

Moody cites Uber's recent decision to make its customers confirm that they're willing to pay for "surge pricing" before they can request a driver. That additional confirmation was added because Uber had "removed too much friction," making it too simple for people to request a ride during peak hours and then get stuck with huge fares, according to Moody.

A balance between ease of use and providing the pertinent information protects consumers and helps build trust between service providers and their customers. "If you break that trust, it's really hard to get it back," Moody says.

Future of wearables and mobile payments

The panelists agreed that there won't be a one-size-fits-all approach to mobile payments or mobile wallets. Just as people carry multiple credit, loyalty and membership cards today, they'll likely use more than one mobile wallet or payment option, on multiple devices, in the future. "It's hard to say there will be one solution that solves all [the challenges]," Wyper says, and a number of different apps and services will provide built-in payment options.

Beyond payments, data collection and predictive analytics, wearables will also play a key role in the future of customer loyalty and ticketing, according to Wyper.

 

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