World shipments of wearable devices used in payments are projected to increase from 11.6 million units in 2015 to 153.2 million in 2020, according to latest research from IHS Technology (NYSE:IHS).
Following are key findings from the latest wearable payment device research from IHS Technology:
- The wearable payments attach rate is projected to increase from 13 percent in 2015 to 45 percent in 2020.
- Devices worn around the wrist (e.g., smartwatches, wristbands, fitness and heart rate monitors) are projected to account for the vast majority of volume shipments throughout the forecast period. Wrist devices accounted for 92 percent of wearable shipments in 2015, which is expected to remain unchanged through 2020.
- Smart glasses and smart clothing (including jackets) will not be major devices for payment systems, because consumers would need either a variety of clothes with the technology embedded or would need to wear the same clothes daily, to perform the payment function. Devices worn on a daily basis are likely to gain more traction with payments.
- Contactless point-of-sale (POS) terminals are required to complete a transaction via wearable devices, so growth in wearable payment is directly linked to the number of available terminals.
The currently nascent global wearables market has good growth potential. There are a number of challenges that could affect the growth and development of wearables in the payments market, including end-user acceptance of the technology, staff training, a complex ecosystem that needs to be resolved and the provisioning of wearable devices to payments systems. All of these challenges will need to be overcome in order for this market to realize its potential over the next five years.
Terminology note: Wearable devices designed for payments included in the scope of this report include the following: smartwatches, wristbands, fitness trackers, smart glasses, smart clothing and jackets, jewelry and rings, and other devices.