Wearable payments might fund a near-US$1.4 trillion market by 2027
Wearable payment is a term for transactions a buyer completes using their appropriately-spec'd electronic accessory. This category includes various kinds of device, including smartwatches; fitness trackers; smart rings and the dedicated wristbands issued by some financial institutions. They typically use radio-frequency identification (RFID), near-field communication (NFC) or scan QRs and barcodes to act as payment methods.
Their specific market also has some prominent players, which (slightly obviously) include companies such as Samsung, Visa, PayPal, Mastercard, Google, Fitbit, Barclays, Alibaba and Apple. The space is now projected to cross the US$1.3 trillion mark by 2027, compared to under $300 billion in 2019. This latest prediction would require that it grow at an annual compound rate (CAGR) of 21.7% from 2020 on.
The new estimation is naturally based on the fall-out of the Covid-19 pandemic, as essential retail environments such as grocery stores often encouraged the use of contactless, digital payments from the start of many national lockdowns. Then again, these locations also contributed to nearly 33% of this transaction type in 2019.
Nevertheless, the entertainment sector is thought to start seeing the fastest adoption of these payments into this coming decade, with a CAGR of 23.8% until 2027. On the other hand, the relatively high price of a payments-enabled wearable may be one thing that could prevent such growth. In addition, the risk of theft is another powerful disadvantage for consumers considering such a purchase or using their existing wearables' payment function.
Despite this, the fastest-growing sector by device type may be that of the smartwatch, with a CAGR as high as 23.7% over the next 7 years. Finally, the Asia-Pacific sub-market may exhibit the highest growth rate (up to 23.3%) per year for the same time-frame, taking over from Europe in 2019.