Payments made via so-called wearables are forecast to soar in the years to come, so Visa Inc. and MasterCard Inc. are positioning themselves to cash in with announcements made Monday at the huge Mobile World Congress in Barcelona, Spain.
MasterCard unveiled a partnership with WiseKey, a Swiss company whose security software is already used by luxury watchmakers Hublot and Bulgari. The idea, MasterCard says, is to bring contactless payments to any watch, not just high-tech devices like Apple Inc.’s Watch, which works with the company’s Apple Pay mobile-payments service.
The WiseKey deal will bring capability for payments via near-field communication, the technology Apple Pay and other mobile wallets use, to traditional timepieces. “We’re combining [WiseKey’s] security software with our payments technology,” Sherri Haymond, senior vice president for digital payments and labs at MasterCard, tells Digital Transactions News. In this way, the initiative, she says, is intended “to add payments functionality to a traditional watch that’s already on your wrist.”
Meanwhile, Visa said it is enlarging its Visa Ready program, which includes access to its Visa Digital Enablement Program, to device producers beyond mobile point-of-sale companies. VDEP serves as a token-service provider masking actual card-account numbers for digital transactions. The initial focus of the program, Visa said, will be wearables and automobiles.
“More and more, consumers are relying on smart appliances and connected devices to make their lives easier,” said Jim McCarthy, executive vice president of innovation and strategic partnerships at Visa, in a statement. “By adding payments to these devices, we are turning virtually any Internet connection into a commerce experience—making secure payments seamless, and ultimately more accessible, to merchants and consumers.”
Similarly, MasterCard says its wearables program will extend to “any consumer gadget.” Earlier this year, for example, the company announced an initiative that would allow so-called smart refrigerators to order groceries and pay for them remotely. MasterCard cites a finding from research firm Tractica predicting payments volume via wearable devices alone will total $501 billion by 2020.
Driving the growth, the network says, is a growing consumer preference, particularly among younger consumers, to perform payments and banking functions with wearables. Users of wearable technology like fitness bands and smart watches are not only younger and wealthier than owners of smart phones and tablets, they’re also more likely to use the devices for digital banking and payments, according to Javelin Strategy & Research.
In an effort MasterCard says will help clear the path for these devices to add payments functionality, the company also said Monday it has worked with Coin, a startup that makes physical wallets that enable payments via multiple cards held by consumers, to give developers quick access to the tools and documentation of the MasterCard Digital Enablement Service. MDES is MasterCard’s tokenization service for digital payments.
The Coin developer program carries no upfront “infrastructure” fee, MasterCard says, and access is also free of charge. Wearables makers will be charged for actual usage, though MasterCard did not release pricing.
“Signing up for the Coin developer program gives wearables manufacturers transparent access to a turnkey solution,” said Kanishk Parashar, chief executive and co-founder of Coin. “The program makes commerce accessible to makers as payments on wearables become table stakes.” Coin, which launched in 2013 with considerable fanfare, recently found itself the object of a lawsuit charging it misrepresented the capabilities of its device, a card-size gadget that allows consumers to store, select, and use multiple payment cards
Coin is also participating in Visa’s expanded Visa Ready program for wearables, along with Accenture Digital, Giesecke & Devrient, Fit Pay, and Samsung.