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The NFC-enabled wearable payments ring Visa tested out with athletes it sponsored at the Summer Olympics is now available for pre-order by the general public.
The device, manufactured by NFC Ring Inc. with technology from Gemalto and Infineon, is expected to begin shipping in December.
The NFC Ring will function as a Visa or Discover reloadable, virtual prepaid debit card that’s linked to a proprietary mobile wallet on the user’s phone. The company plans to add Mastercard soon. Users can tap the ring to their phone in order to reload funds.
The device is tapping into a growing wearable payments trend. Wearable payments are becoming more popular, as a wider variety of payments companies partner with device manufacturers in order to bring that functionality to consumers. BI Intelligence forecasts that 62%of global-shipped wearable devices will be payments-enabled by 2020. And as offerings increase and consumer demand grows, wearable payment transaction volume could grow to $501 billion by 2020, according to Tractica.
But the NFC ring may face barriers in catching on among the general public:
Price: The ring will sell for £39.99 ($52.92). That’s not terribly expensive in the broad context of the wearables market, but it might be too much for a device whose main use case for consumers will be mobile payments. (The ring will also support some IoT integration as well as enterprise-related functionality.)
Convenience: While consumers are interested in wearable payments, they may prefer the functionality integrated into devices they already own. A Barclaycard study of UK consumers most want to retrofit watches, inherited jewelry, and wedding rings for contactless payments, according to Finextra.
Effectiveness: When I tested the device earlier this summer, it took several attempts to figure out how to position my hand in order to line up the antenna and NFC chip so that the payment would go through. Other publications, including Engadget, reported similar challenges. Use may have simplified since my test in early June, but even small amounts of friction could deter customers or decrease stickiness, hindering adoption.
The rapid expansion of the Internet of Things (IoT) offers payments companies an opportunity to expand beyond mobile phones, cards, and point-of-sale devices, to a broad and diverse ecosystem of internet-connected devices.
We forecast that there will be 24 billion connected devices installed globally by 2020, up from nearly 7 billion today. And over 5 billion will be consumer connected devices by 2020, representing a massive expansion of touchpoints that could eventually offer payments functionality.
Evan Bakker, senior research analyst for BI Intelligence, Business Insider’s premium research service, has compiled a detailed report that dives into the budding industry of connected device payments, providing a rundown of the stakeholders driving innovation in wearables, connected cars, and connected home devices. It also gauges the impact of new payment devices on different payments companies, along with how these devices could shift consumer purchasing behavior.
Here are some of the key takeaways from the report:
The Internet of Things is ushering in a new era for payments companies and manufacturers. The rapid expansion of the Internet of Things (IoT) offers an opportunity to facilitate payments beyond mobile phones, cards, and point-of-sale terminals, on a broad and diverse ecosystem of internet-connected devices.
More transactions could eventually pass through connected devices than smartphones. We estimate there will be 24 billion of these devices by 2020, with 5 billion of them being consumer-facing. This represents a massive expansion of touchpoints where payments could be enabled.
Card networks have developed a basic framework to enable commerce in everyday devices. Visa and MasterCard are creating the underlying infrastructure to support the standardization of payments integration and stake themselves out as the key connected payments gatekeepers. Their payment platforms are universal, allowing digital payments to grow without being tied to the success of a particular manufacturer.
Consumer-facing IoT companies have much to gain from enabling payments in their devices, including improving the value of the device, being able to cross-sell products through the device, and laying the groundwork for future opportunities to earn incremental revenue. For payments companies, connected payments offer a new revenue stream and an opportunity to gain market share ahead of competitors.
Wearables, connected cars, and smart home devices will be the top connected payments product categories.