Last week, Google released the fifth and final developer preview for Android Wear 2.0. The dev preview includes a number of bug fixes and enhancements, along with support for NFC host card emulation (HCE) to enable easy mobile payments. As Jeff Chang, product manager of Android Wear at Google, told The Verge, the company will also be launching two new flagship Android Wear 2.0 smartwatches during the first quarter of 2017.
Put simply, HCE allows mobile devices to emulate a payment card using only software. For brick-and-mortar stores, HCE provides a bridge between the cardholder, the point-of-sale (POS) and the service provider, such as an issuing bank. In the transport arena, a similar analogy applies between a passenger (the customer), the gate (at the railway station) and the operator. HCE also enables consumers to make contactless payments, even without an internet connection, by using preloaded tokens.
Perhaps not surprisingly, a Stratos poll of U.S. smartphone owners found that more than two-thirds of respondents would prefer to use a wearable device rather than a mobile phone to make in-store payments. Stratos also confirmed that mobile payments could also increase the frequency of wearables usage, with half of respondents stating they would use a wearable device more if it was capable of making in-store payments. Overall, more than four in 10 respondents said they would make in-store payments via wearables.
As such, Samuel Murrant, a senior analyst who covers consumer payments at Verdict Financial, recommends that the payments industry “focus on partnering with companies selling compelling, multifunctional wearable devices and incorporating payments functionality into them.” Similarly, Milos Dunjic, the president of Lungo Consulting, says he hopes major payments industry players will take notice and embrace the concept of wearable payments which can enable a “very bright future.”
As we’ve previously discussed on Rambus Press, next-gen mobile payments are likely to evolve a new retail paradigm that will help redefine a traditional brick-and-mortar experience which has grown stale and static for consumers and purveyors alike. For example, mobile wallets housed on smartphones and wearables will allow retailers to collate purchasing data and track trends; increase upsell, cross-sell opportunities and brand loyalty; reduce transaction fees with integrated credit card payments; minimize staffing requirements for check-out lines; and free up more store space for actual products. For consumers, mobile payments offer a convenient “tap and go” frictionless commerce experience that effectively eliminates the waiting time EMV card readers have added to transactions.
Unsurprisingly, Google has already taken the next step for a true frictionless commerce experience by introducing a new Hands Free app that allows users to make in-store payments without ever taking out their smartphone or wallet. Similarly, Amazon is currently beta testing a new type of brick-and-mortar store that replaces the traditional checkout lines and registers with a Just Walk Out Shopping experience. Shoppers simply load up the Amazon Go app upon entering the store, take the products they want and go.
Meanwhile, Bluetooth beacons, along with the superimposition of digital content on top of a view of the real world (AR), offers us an exciting glimpse into a future world where online behavior seamlessly blends into offline activities. Similarly, biometric security continues to evolve, with more advanced techniques likely to be integrated into next-gen wearables to enable quick, effortless and secure mobile payment transactions.
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