Mastercard has introduced tokenization into a small and flexible chip that can be attached to wearables and accessories such as watchstraps or keyrings, turning them into contactless payments devices.
Benjamin Gilbey, senior vice president for digital payments and labs in Asia Pacific at Mastercard, takes The Drum into the finance company’s vision of the future of wearables.
According to Allied Market Research, the wearable payments market is projected to reach $1.37 trillion by 2027. In Asia Pacific, the region is projected to register the highest compound annual growth rate of 23.3% during the forecast period, due to the large consumer base using contactless and wearable payments regularly across China, Australia, Singapore and South Korea.
Gilbey says this means as more people turn towards contactless payments options, there is a great need to provide them with access to solutions that keep up with changing and digital-first lifestyles and needs and keep them secure at every step of the way.
Contactless payment is also particularly important now, as consumers in Asia and across the world are migrating towards contactless payments during the Covid-19 pandemic to stay safe and adhere to social distancing measures.
“The wearable market is expected to grow, offering greater control and flexibility to consumers. As new players and products enter the market, collaborations such as ours will prove to be crucial to enable these upcoming players to enhance their offerings and products for customers,” he explains.
“The future is wearables – where all items consumers wear every day can be used as a payment device. Our partnership allows all three of us to bring the best of our capabilities and expertise to the table to keep up with consumer habits and demands.”
He continues: “Brands and marketers can tap into this trend by offering their customers an alternative way to pay that is safe, provides peace of mind to customers that their transactions are always safe, and also fits with the changing lifestyles.”
This is why Mastercard partnered with Singapore-based fintech startup MatchMove and wearable payment enabler Tappy Technologies to allow MatchMove cardholders to add their MatchMove Mastercard to this payment chip by placing the wearable or the accessory on a Bluetooth-connected device developed by Tappy.
After downloading the Tappy app and following the in-app instructions, the MatchMove Mastercard will be tokenized via Mastercard’s Digital Enablement Service (MDES) into the secure payment chip of a wearable via the Bluetooth device.
This wearable device works exactly like any contactless card or digital wallet where the user taps the wearable at any accepted terminal.
“With tokenized payments on wearables, consumers now have an easy way to push payment credentials directly from the issuer environment to merchants, wallets and devices without needing to have their physical card on hand or take out their phone from their pockets,” says Gilbey.
“The tokenization enablement benefits consumers as it reduces fraud related to digital payments by making transactions more secure by including a dynamic component with each transaction. It also takes the security of a physical EMV chip and applies it to non-card environments including proximity, mobile and internet payments.”
He adds: “Even merchants benefit from more secure transactions, as well as faster checkout experiences, new payment acceptance options.”
Gilbey is excited about the frictionless possibilities this will bring for tomorrow as all people will need when they are out and about is their wearable device. He says they can start their day by going to their favorite coffee shop and paying for that morning cup with their wearable device.
Even on their way to work, people no longer need to stop and top up your touch-transit cards (like Singapore’s SMRT/EZLink), they can just tap at the turnstiles or payments touchpoint.
“If you decide to go shopping or pick up groceries on your way home, you can simply use your wearable to tap and make your purchases. How much more convenient life is when you don’t have to keep reaching into your wallet for your card or keep having to take your phone out!” he adds.
Alongside technology playing a huge part in Mastercard's future strategy, the brand's chief marketing officer and World Federation of Advertisers (WFA) president Raja Rajamannar recently spoke to The Drum about how empathy and understanding will also help marketers navigate choppy waters in the year ahead.