Wearable Payments: A Growing Trend in the Consumer Journey

By: Discover Global Network

Social trends change what we wear— and now increasingly the way we pay.
With consumers’ preference for everything contact-free, wearable payment technology is finding new momentum. Driven in part by the impact of the COVID-19 pandemic, the popularity of so-called “clean” payments— everything from payment-enabled rings, bracelets, key fobs, fitness bands, stickers, cufflinks (and of course, phones)—is rapidly accelerating around the world.

These battery-less devices—known as passive wearables—are increasingly showing up in surprising new ways as they attract the attention of the worlds of jewelry and fashion. A well-known French designer has created fashionable rings to carry payment information. New designs for bracelets and cufflinks include payments technology, while wristbands and fabrics weave interactive sensors into jackets and pants.

Technology Makes It Possible
For merchants, understanding the growing trend of wearable payments is key. The path of adoption for these new devices kicked off more than a decade ago with the rise of wearable tech, such as fitness trackers, and the introduction of smart watches. While fashions and trends can lead to mixed marketing results for the uptake of different products, consumer acceptance overall has grown with a surge in the appeal for many devices.

As consumer comfort has increased over the years, so has the potential for payment-enabled devices. With technology such as D-PAS Connect from Discover® Global Network, consumers can carry or wear their favorite payment methods while leaving their cards and wallets at home. By partnering with the network, merchants can incorporate the flexibility needed to accommodate this payments trend.

Today, these passive wearables are finding uses for payments in resorts and hotels, amusement parks, music festivals and concerts, cruise ships, transit, sporting events and campuses. A recent survey of 15 countries by 451 Research found that Bulgaria, Greece, Peru, Poland, South Africa, Italy and Spain were among the top countries that had the greatest interest in these payment opportunities. 1

The appeal is clear. Customers choosing to link an account to these reloadable devices—with a bank or debit or credit card—can avoid the need to continuously add funds. Indeed, in the 451 Research survey, the most popular method for funding a passive wearable wristband, for example, was through automatic uploads from a bank account. 1

Even without traditional banking relationships, consumers can enjoy stored-value flexibility. For travelers and tourists, or the unbanked or underbanked population, which represents a significant portion of consumers in many countries, these reloadable options can be key. Just locate a participating merchant or stand-alone kiosk, insert cash, and the cardholder can top off the value on the device or accessory. For consumers without an account, or for those who prefer not to link them, these reloadable devices provide a valuable payment alternative.

D-PAS Connect also enables passive wearables to go beyond payments. By combining functionalities, consumers are able to access hotel rooms, loyalty sign-ins, concert tickets, transit passes, and more. Shops, restaurants, hotels, and entertainment venues can provide guests enhanced services and product options by embedding payment and other offers into various devices.

Are Consumers Ready?
The take-up of these new payment capabilities, while growing worldwide, differs among countries and regions. For example, 54 percent of global consumers said they were “highly comfortable” with contactless payments in general, while nearly two-thirds (65 percent) said they wished more places accepted contactless options, citing speed and convenience as their top two reasons, according to the 451 Research survey.1 In particular, Poland and Australia stood out as among the most receptive countries to contactless payments, with 78 and 64 percent of consumers, respectively, saying they actually “prefer” that method.

In contrast, consumers in the U.S., which rolled out its adoption of contactless payment cards later than many other countries, have remained more reluctant. Only 19 percent of U.S. consumers said in a survey before the pandemic hit in 2020 that they “prefer” contactless payments, compared with 45 percent average globally. 1

But that changed last year. Positive sentiments about the convenience and preference of contactless payments is growing. In a survey conducted for Discover Financial Services in late 2020, a full 68 percent of those surveyed in the U.S. said they would be increasing their use of contactless payments to avoid touching surfaces while shopping for the holidays.2

New Horizon for Merchant Opportunities
New payment wearables don’t provide only convenience for consumers, they also offer merchants a new way of capturing and retaining customers—but only if they’re ready.

Merchants increasingly need to recognize the trends that drive customer preferences. Surveys have shown that preferred payment method acceptance is the most important attribute when consumers are shopping at stores.3 With the rise in wearable payments, merchants working closely with a payments network partner can help ensure their capabilities are ready.

The benefits are many. In addition to expanding payment and marketing methods, the information gleaned from customer transactions provides issuers and merchants with smarter insights from consumer behavior. By tying purchase data from payment-enabled wearables into loyalty offerings and cross-selling incentives, marketing efforts can be expanded to open up further opportunities to generate sales. These carry-everywhere objects— embedded with identification and individual account data—allow merchants to incentivize customers in real time at checkout. These low-cost objects can also be branded as loyalty tools, which consumers consistently say increases their likelihood of shopping at a merchant.4

With so many new payment alternatives, merchants can also provide point-of-sale (POS) options that don’t require customers to stand in line for a fixed terminal. Employees working in-store, at-kiosk, or at outside retail stands can use mobile scanners and NFC devices to quickly read payment information with just a tap from customer bracelets, rings or watches.

Stay Tuned for More
As payment technology advances in both convenience and security, the possibilities for creative and increasingly attractive payment options will grow. New devices, platforms and applications—and, ultimately, increased acceptance—are in the works. These new customer journeys, made faster and simpler through wearable payment methods, will continue to set new customer expectations.

As consumers become more accustomed to living contact-free lives, merchants should prepare now to take advantage of tomorrow’s consumer behavior. By working closely with their payment partners, merchants can capture the opportunity that exists within this growing trend. Ensuring the acceptance of payments—in the style and manner that consumers prefer—is a most effective way to deliver the experience that customers want.

EMV® is a registered trademark in the U.S. and other countries and an unregistered trademark elsewhere. The EMV trademark is owned by EMVCo, LLC.

1 451 Research, July 2020. Creating Engaging Customer Experiences with Passive Wearable Payments. Viewed 4th December 2020.

2 Discover Financial Services, November 2020. 1-in-3 Consumers Plan to Spend Less This Upcoming Holiday Season. Viewed 1st February 2021.

3C+R Research Study of 1,808 Discover Cardholders, August 2020, commissioned by DFS Services LLC.

4451 Research, March 2020. Global Merchant & Consumer Study: In-Store Payment Trends. Viewed 11th January 2020

The information provided herein is sponsored by Discover® Global Network. It is intended for informational purposes, and is not intended as a substitute for professional advice.