Smart Payments: Wearables as an Extension of Mobile Wallets

The term “wearables” is short for wearable technology devices. Wearables are smart electronic devices that are worn on a person’s body in some way. Smartwatches and fitness trackers are the most popular wearable devices by far. But wearables don’t end there. There are also eyeglasses, finger rings, bracelets, keychains, and even clothing items with built-in technology, for example. Those wearables can perform a variety of tasks such as sending messages and monitoring health data, and they are also increasingly rendering it faster and easier to make payments.

In order to explain the principle of using wearables to make payments, we first have to take a step back. Mobile wallets are already in widespread use in Switzerland. In the first half of 2023, more than one in seven transactions in Switzerland were processed via mobile payment solutions. Of all mobile payment solutions, wallets were used most frequently for on-site payments (32.1 %). In order for a wallet to work, a secure component safely stores users’ payment information in a protected area. The sensitive card data is encrypted as a token. So, instead of carrying a debit or credit card with them in a physical wallet, people can simply use their wallet via smartphone as a means of payment. All they have to do is to hold their device close to a contactless payment terminal. Near-field communication (NFC) technology makes it all work smoothly.

NFC is a set of communication protocols that enables two devices to communicate with each other when they are in very close proximity to one another. NFC is a technology similar to Bluetooth, only more secure because NFC normally works over a distance of around four centimeters or less. NFC technology is most commonly used for contactless payments. Today it also works for cash withdrawals at a number of automated teller machines in Switzerland. Another application area is ticketing in public transportation or on ski slopes, for example.

In order to turn a wearable into a means of payment, the wallet has to be configured on the wearable. In some cases, a wallet can also be directly linked to a wearable, like with the Apple Watch, for example, which works via Apple Pay. For other providers like SwatchPAY!, for instance, there’s a separate app that requires you to enter your card details and stores the data in the wallet. If your smartphone is connected with the wearable, normally via Bluetooth, the wearable functions like a wallet.

But what if my watch gets stolen? Nothing much can happen if it does because like with all contactless payments in Switzerland, a maximum limit of 80 Swiss francs per purchase also applies to wearables. All amounts above that require a PIN to be entered. Moreover, the token can be blocked at any time either via app, e-banking or by calling the bank.

It just recently has become possible in Switzerland to also pay with debit cards via wearables from Fitbit, Garmin Pay, SwatchPAY!, and Fidesmo Pay. Fitbit, Garmin, and Swatch offer smartwatches while other means of payment as well such as rings, bracelets, or keychains, for instance, can be obtained from Fidesmo.