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Apple Watch could provide a timely boost for contactless payment

The new Apple Watch, which went on general sale this week, is being touted as a game changer for fashionable wearable tech but could also have a significant impact on the future of contactless payments in stores.

The Watch – which became available for pre-order on April 10 selling nearly one million devices in the first 24 hours ahead of its full launch on Friday (April 24) – comes in 25 styles across three collections: the standard Watch range (£479 to £949), a cheaper Sports collection (£299 to £399) and the more premium Edition range (£8,000 to £13,500).

According to ABI Research, last year just over five million smart watches were sold globally, and it predicts Apple could sell around 13.8 million this year, representing nearly 50% of total projected smart watch sales in 2015. By 2020 close to 100 million smart watches are expected to be sold each year.

Annette Zimmermann, research director specialising in wearables at technology research and advisory firm Gartner, tells Drapers: “From a functionality perspective it’s not significantly different [to other competitor smart watches] but the majority of people buying it already have big Apple ecosystems at home.”

Apple Watch

Apple Watch

She adds this is the first time that such a device has also been positioned as a fashion product targeting both men and women, “rather than a geeky gadget”. Apple has consistently referred to the product as a “timepiece” rather than a smart watch and it even appeared on the front cover of Vogue China’s November issue.

Aside from its key functions – including making and receiving phone calls, texts and emails, calendars, health apps, Siri-based voice recognition, maps, weather updates and music – the Watch also has the capability to make contactless payments through Apple Pay.

Apple Pay is not yet available in the UK after it initial launch for the iPhone6 in the US in October, but its introduction here is thought to be imminent. Once enabled here, and with the numbers investing in the new Watch, it could have big repercussions for retailers.

The Watch will be able to store Visa, Mastercard and Amex card details and using near field communication technology allow wearers to make purchases by double clicking the side button and holding the device near contactless till point readers.

Fashion retailers already signed up to the payment system in the US include American Eagle Outfitters, Bloomingdale’s and Foot Locker.

Other smartwatch brands are also looking into offering contactless payment options including Swatch which has announced plans to unveil a watch capable of making payments in May.

Nick Spencer, senior practice director for mobile devices and wearables at technology market intelligence firm ABI Research, explains contactless payments more generally are “starting to take off” and using watches for this is “an improvement on existing use of contactless payments. That’s where technology is best, where it’s improving existing behaviour.”

“Apple does tend to move markets, because of its brand equity people want to get involved and show they are innovating for their consumers. People will get used to using watches for payments as moving from getting out contactless cards to using watches is not a huge leap. I can see people adopting it more and more. It could be a driver to start increasing contactless payment options.”

Apple Watch

Apple Watch

Jon Edgcombe, software group leader at product design and development firm Cambridge Consultants, adds: “Done right, contactless payment gives a compelling and fast user experience, and using a watch is even faster than getting a phone out of your pocket.

“Given that many retailers are only just rolling out contactless terminals, there is education and training required for staff as some upcoming payment solutions may ‘just work’, even though the device doesn’t look like a bank card.”

He adds retailers need to be clear with consumers about whether they support the technology and monitor failed transactions closely to avoid retail staff becoming tech support, as well as considering simple ergonomic changes at the till. “There are great opportunities here to make payment times faster and increase throughput - but care definitely needs to be taken to keep the user experience consistent.”

James Doyan, managing director of retail consultancy Athito Retail, adds Apple Pay will benefit retailers as it “will push consumers through the till more quickly as that’s such a blocker in terms of processing transactions.” But he adds the missing element is at the luxury end of the market where shoppers like to present certain cards at the till, which they won’t be able to do with Apple Pay, and Apple needs to find a way to address this.

To read a blog review of the Apple Watch click here.

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