ID: MRFR/SEM/9142-HCR | July 2021 | Region: Global | 120 pages
The wearable payment device market is estimated to reach USD 7.39 billion by 2027, registering a CAGR of 7.3% during the forecast period of 2021–2027. Digital payments have become one of the primary growth imperatives for a country's economy. It can help boost productivity and economic growth, improve transparency, increase tax revenues, expand financial inclusion, and open new economic opportunities for the end users.
For instance, the Government of India has launched various initiatives such as Digital India and the launch of Unified Payments Interface (UPI) to help promote digital payments, which increases the adoption of transactions made via smartphone and wearable devices. Such initiatives help facilitate digitalization and raise awareness about the advantages of using new technologies.
Digitization has led individuals to prefer online payment methods over traditional payment methods. The advent of e-commerce is transforming the business landscape. Several firms are capturing new opportunities in the electronic marketplace through innovative business models. The established firms are looking to transform their old business models as per the new environment.
E-commerce is generating wealth, mostly through entrepreneurial start-ups and corporate ventures. Government organizations across the globe are encouraging digital transactions that have led to the development of various mediums of payment. One such payment device is developed as wearable smart devices. These devices are used as a medium of payment connected with transactional authority while paying on any merchant website or through internet banking.
Moreover, the increasing penetration of smartphones, tablets, and wearable devices is fueling the wearable payment device market. M-Commerce reduces overhead costs and increases transactional efficiency by eliminating the physical presence of the user and other intermediaries. Advances in wireless and mobile technologies are expected to increase the number of transactions over the forecast period, which is further expected to increase the adoption of wearable payment devices. However, security is one of the primary concerns that keep consumers from engaging in digital purchases.
The growing consumer inclination towards the easy and efficient purchase of goods and services has paved the way for digital and cashless payment methods. The evolution of digital payment methods has led to recognized brands stepping into the payment industry and offer applications and services that allow customers to make payments with their smartphones and wearable devices. The increasing use of digital payments has increased significantly during the lockdown periods.
This has changed the way people used to make purchases as it allows cashless transactions and can be performed at maintaining a certain distance. Increasing ownership of wearable devices is one of the major growth enablers for digital payment. The rise in several wearable devices has started an era of mobile commerce that provides consumers with an easy and efficient means to purchase goods and services online
COVID-19 has created a massive challenge for businesses globally: to continue functioning despite global shutdowns of offices and other facilities. The IT infrastructure on which they have depended, including data centers, cloud systems, departmental servers, and digital devices, are now remote. This has exposed network architecture to cybercrime. In India, for instance, according to a paper published by Economic Times, in June 2020, cybersecurity attacks and breaches in the country have increased by approximately 500% since the lockdown was first imposed. Internet service providers have received cyberattack alerts from corporate clients almost every alternate day compared to an average of once a week before lockdown. According to a cybersecurity company named the proportion of Darktrace, the percentage of attacks targeting people working from home increased from 12% of malicious email traffic before the lockdown to more than 60% six weeks later.
Digitization has transformed the way an individual or enterprise makes payments and transact. It has also created a centralized structure for organizations, giving them the freedom to access data from anywhere. This has encouraged businesses and organizations across verticals to digitize their work processes. However, the rapid adoption of digitization has also exponentially increased the amount of data across every enterprise. These large volumes of data need to be organized, computed, and analyzed to better understand cash flows, tax files and claims, and other financial processes. The adoption of wearable payment devices allows users to transact in simple steps, thereby reducing the need for complex steps. Hence, the increasing volume of financial transactions owing to digitization has created a significant demand for wearable payment devices.
The data processed during an online transaction is difficult to back up and depends on the storage capacity of the organization’s server. This can lead to data corruption and theft, compromising the wearable devices. In the past few years, the demand for secured payment gateways for mobile devices has risen significantly to cut down on infrastructural costs. Vulnerabilities such as untrusted networks, improper network connectivity, and unauthorized access to data can result in crucial losses. Hence, the increasing concerns about data privacy and security might hamper the growth of the global wearable payment device market.
Artificial intelligence (AI) integrated with wearable devices can accomplish complex tasks with ease and precision. AI has already been adopted in many application areas in banking and financial services. This has encouraged solution providers to integrate their devices with AI modules to cater to the increasing demand for automation. In a digital transaction, robotic process automation (RPA) bots perform various tasks, including transaction entries into a system, extracting information from multiple applications, performing calculations, and filing essential documents. Thus, the need for integrating AI and wearable digital payment services for the streamlining of financial processes is expected to increase over the forecast period.
The wearable payment device market is rapidly growing with favorable growth prospects in the coming years. The rapid adoption of wearable payment devices is expected to drive the wearable payment device market toward steady growth during the forecast period. The value chain of the tax software market consists of device manufacturers, online payment gateways, software companies, service providers, and buyers.
By device type, the wearable digital payment market has been segmented into smartwatches and fitness trackers. Among these, smartwatches dominated the market in 2020 and are expected to continue dominance throughout the forecast period. The smartwatches developed nowadays are equipped with touchscreens and various application interfaces that allow the user to make the payment via NFC or Wi-Fi, thus eliminating the need for using the smartphone or debit/credit cards at the time of payment. Smartwatches are also enabled to make payment via entering a PIN or passcode, which is linked to their smartphones. By technology, the wearable payment device market has been segmented into RFID and NFC. Among these, RFID dominated the market in 2020. However, NFC is expected to take over the market by the end of 2023.
By application, the wearable digital payment market has been segmented into retail stores, restaurants, utility outlets, and entertainment centers. The major applications of wearable payment devices have been retail stores and restaurants. However, the entertainment centers segment is expected to show the highest CAGR during the forecast period.
By region, the wearable digital payment market has been segmented into North America, Europe, Asia-Pacific, and the rest of the world.
The global wearable digital payment market is estimated to grow at a significant rate during the forecast period from 2021 to 2027. The geographic analysis of the wearable digital payment market has been conducted for North America (US, Canada, and Mexico), Europe (UK, Germany, France, Spain, Italy, and the rest of Europe), Asia-Pacific (China, Japan, India, and the rest of Asia-Pacific), and the rest of the world (the Middle East and Africa and South America). Among these regions, North America has dominated the global market in 2020 and is expected to maintain its dominance throughout the forecast period. On the other hand, Asia-Pacific is expected to witness the fastest growth during the forecast period.
Dominance of North America Throughout the Forecast Period
North America is a frontrunner in adopting innovative technologies. The wearable payment device market in North America is competitive due to the presence of many solution providers. The regional market is already at a growth stage, and therefore, it is expected to witness steady growth compared to other regions. The well-developed digital economy in North America and the expansion of the mobile commerce industry are key factors contributing to the growth of the wearable payment device market in this region. The US and Canada are key countries considered for the market analysis in this region. Organizations in both these countries are implementing digital payment solutions, owing to the rising trend of mobile app purchases and wearable device innovations.
European MarketContinues to Show Maturity
Europe consists of several countries that are economically stable and technologically advanced. The UK, Germany, and France are the key countries considered for market analysis in the European region. The wearable payment device market in Europe is witnessing significant growth due to the adoption of mobile payment services, digital wallets, and the integration of cellular networks in wearable devices. Awareness of the benefits of m-commerce, coupled with an increase in the number of smart device users, has led to the widespread acceptance of wearable payment device solutions. According to an annual study on payment conducted by Visa, more than 68% of the European population have made digital transactions through e-wallets and mobile payment services. This is expected to increase with the adoption of wearable devices.
The global wearable payment device market is characterized by the presence of several international and regional vendors. The wearable payment device market is highly competitive, with all the players competing to gain market share. The convergence of IT and OT ecosystems and increasing risks of cyber threats on traditional payment infrastructure are key factors fueling the market growth. The vendors compete based on cost, product quality, reliability, and aftermarket services. The growth of market vendors is dependent on market conditions, government support, and industry development. Thus, the vendors should focus on expanding their geographic presence and improving their services. They primarily focus on the development of sophisticated wearable payment devices.
|Market Size||USD 4,858.8 Million (2020)|
|Forecast Units||Value (USD Million)|
|Report Coverage||Revenue Forecast, Competitive Landscape, Growth Factors, and Trends|
|Segments Covered||Device, Application, Technology, Region|
|Geographies Covered||North America, Europe, Asia-Pacific, and Rest of the World (RoW)|
|Key Vendors||Microsoft Corporation, Huawei Technologies, Sony Corporation, Thales SA, Westpac, Intelligent Venue Solutions, Caixa Bank, IntelliX Software, Nymi Inc., McLEAR LTD., Jakcom Technology CO., Token Inc., Infineon Technologies AG, Printplast|
|Key Market Opportunities||Increasing adoption of advanced technologies in the wearable payment device market|
|Key Market Drivers||Increasing focus of wearable technology providers on offering enhanced customer services with mobile applications|