Propelled in large part by the rise in cashless payments, the global wearable payments market is ready for takeoff.
A new report from Allied Market Research predicts this market will soar from $285.5 billion in 2019 to $1.37 trillion in 2027. The industry’s compound annual growth rate will be 21.7% from 2020 to 2027, the report says. Among popular wearable payment devices are smartwatches, fitness trackers, payment wristbands and smart rings.
Aside from greater adoption of cashless payments, the report predicts drivers of the wearable payments sector include enhanced demand for wearable devices and improved customer experiences with wearable payment methods.
However, the report adds, the high cost of wearable devices, the risk of device theft and the limited battery life of these devices hinder growth of the market. On the other hand, the increased use of NFC, RFID and host card emulation technology “is expected to create lucrative opportunities for the market players in the coming years,” according to the report.
The wearable payments industry is benefiting from the coronavirus pandemic, which has spurred demand for contactless payments at grocery stores and other retailers, the report says. But the pandemic-disrupted supply chain has slowed the manufacturing of smartwatches and other wearables.
Smartwatches accounted for more than two-fifths of the global wearable payments market in 2019, the report says. Why? The report cites stepped-up demand for wireless fitness and sports devices, a surge in health awareness and a number of technological advancements. However, smart rings are projected to see the highest compound annual growth rate — 23.7% — from 2020 to 2027 due to further adoption of cloud-enabled rings.
As for settings where wearable payment devices are widely used, grocery stores led the way in 2019 with a nearly one-third share of the market, the report says. Among the reasons for escalating adoption of contactless and wearable payments devices at grocery stores and other retailers are a desire to ramp up transaction speeds and attract more customers.
From 2020 to 2027, the report says, entertainment centers are predicted to witness the most growth in wearable payment devices — 23.8%.
Which regions will experience the biggest boom in the wearable payments market? That honor goes to the Asia-Pacific region, which the report indicates will notch a 23.3% compound annual growth rate from 2020 to 2027. That stems from widespread use of contactless and wearable payment technologies in Australia, China, Singapore and South Korea. North America was next.
The key players profiled in the wearable payments market analysis notably include two major credit card processors:
- Alibaba Group
- Samsung Electronics
- Visa Inc.
“As wearable technology matures, fashion brands are driving the next evolution in the market, creating wearables that are now high-end accessories rather than just functional,” Mastercard said
Arjan Bol, a Mastercard executive in the Netherlands, believes consumers will embrace new payment methods as long as the providers are trusted brands.
“It is remarkable to see how easily consumers switch to new innovative payment technologies which fit into their digitally connected lifestyle,” Bol said in this Mastercard announcement. “Wearables give people more convenience and ease of mind while providing the required trust and security.”