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The Future Of Payments

From heartbeat monitoring bracelets to 'selfie payments', the future of spending is on its way

3Mar

Pick up a new iPhone and, as part of the setting up process, you will be asked to connect a bank card to the device. After a straightforward confirmation process, your smartphone is now capable of making payments just as a contactless-enabled card is, with all the ease of getting out the phone you're likely clutching anyway. Samsung is set to release a similar system, Samsung Pay, by the end of March.

However, this is just the start of a movement towards alternative means of payment that will make even the process of removing your card from your wallet seem downright inconvenient. The card has not been stripped of its necessity, but we are entering a world in which payment is more flexible than it ever has been, with multiple devices capable of making different kinds of transactions. The average US citizen makes 376 non-cash purchases every year, and this number is only set to grow alongside the availability and diversity of wearable tech that doubles as a contactless card.

Global investment in financial technology (FinTech) jumped from $4 billion in 2013 to $12 billion in 2014, and wearable payment tech is just one offshoot of it. The growth is part of a wider trend of changes to financial services - from P2P lending to the increase in use of digital currency - and the advancements could benefit both bank and saver. For one, the use of different technologies makes less likely the chance of a false decline, a security measure in place when spending money abroad, designed to protect against fraud. The value of false declines hit $118 billion per year, according to the Financial Times, 13 times the amount lost to actual fraud. And at MWC 2016, held in Barcelona, the future of payment technology - and payment security - was on display.

Smart rings, fitness trackers, smart watches and more all have the potential to make payments in the very near future. Not only are the big financial incumbents focusing their efforts, startups specializing in the field are burgeoning. The ways in which alternative payments are being brought to market is interesting, too. Topshop's partnership with bPay - Barclaycard's contactless division - has already brought into existence a number of 'bespoke products' fitted with bPay, from wristbands to smartphone covers to keychains. And, as the technology hits the high street (as well as smartphone contactless payment becoming a more normalized means) any public scepticism surrounding alternative payment methods should erode, and the range of available products will only grow.

Topshop's inclusion of bPay has been matched by the fact that Hublot and Bulgari watches are set to have WiseKey introduced, giving them payment capabilities. These are both early examples of high street adoption taking to the public what has, up until recently, been the domain of the financial services. Payment capability is arguably the most functional of the otherwise gimmicky additions to wearables to be developed recently, and it seems it is here to stay, as more innovative security solutions promise to assuage lingering public scepticism.

MasterCard, one of the key proponents of alternative payment methods, announced in 2015 that they had successfully - alongside Canadian biometrics company Nymi - completed the first wearable payment system to be authenticated by the user's heartbeat. The wristband, which detects the wearer's unique heartbeat pattern, executes a payment when held up to any terminal that accepts MasterCard. Its lack of other functionality makes it a relatively inviable product at present but its functionality could be feasibly put into watches or designer jewellery.

But perhaps the most eye-catching of the security conscious developments on show at MWC 2016 was MasterCard's 'selfie pay'. A natural graduate from the improvements in fingerprint recognition technology - buying on mobile can utilize TouchID, for example - 'selfie pay' can be used to authenticate more expensive transactions. The system, which uses facial recognition, commands a blink to confirm that you are more than simply a 2D photograph, and authorizes the transaction. The technology may initially seem gimmicky, but the process is actually very secure and is being designed to replace SMS password systems and relatively laborious pin-entry processes. The mobile is becoming a payment hub and if contactless card is a little insecure for your liking, unless you have an identical twin, selfie-pay could be for you.

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