The global wearable payments market size was valued at USD 425 billion in 2021 and is estimated to reach an expected value of USD 2525 billion by 2030, registering a CAGR of 21.9% during the forecast period (2022 – 2030). Smartwatches, rings, wristbands, and fitness bands are a few examples of wearable technologies that facilitate transactions. Additionally, several businesses have unveiled brand-new wearable technology that links clients to their bank accounts. A significant factor driving the growth of the global wearable payments market is the shift in preference toward wearable payments among different industries to boost customer convenience. Additionally, many businesses are implementing wearable payment technologies to enhance the client experience by eliminating the hassle of managing currency and the concern over pickpocketing. Additionally, many retail and transportation companies are implementing wearable technology to give customers a simpler, more practical experience, accelerating the market's expansion.
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The Urge for the Adoption of Cashless Payments across the Globe
Rapid digitization across the emerging countries of Asia-Pacific, such as China, India, Singapore, and South Korea, has attracted many individuals and businesses toward cashless payments. In addition, various banks and commercial sectors are using wearable payment devices and cashless payment services, owing to their benefits, which include formalizing transactions and reducing human errors. Furthermore, various governments across the globe are investing heavily in digitizing the payment process and increasing the adoption of wearable and cashless payment technology, which are driving the market growth. Furthermore, banks and FinTech industries across the globe are finding it challenging to manage cash transactions daily due to the rise in demand for salary hikes from employees and the decline in the profit margin of the banks, which is boosting the growth of the market. In addition, the increase in cashless transactions across the globe has helped emerging countries boost their GDP, which impacted the country's development. For example, as per the report published by BCG in 2019, the rise in cashless payment in emerging countries has contributed to around 3% more than the annual GDP of the country, which is a significant factor driving the market growth.
Emerging Need for Wearable Devices and Contactless Payment for Secure and Safer Payment Transaction
The market is expanding because of an increase in digitalization worldwide and changes in people's lifestyles in both developed and developing countries. Additionally, the rapid use of wearable technology for various benefits—including fitness, fashion, and contactless payments—boosts the market's expansion.
Additionally, as cyberattacks on mobile payment and internet payment systems have increased globally, more users favor contactless payment methods. Significant banks and FinTech companies worldwide have implemented wearable and contactless payment systems to increase the transaction process's security and make it easier. For example, according to Visa Australia research, contactless payment devices accounted for around 90% of all transactions in Australia and the Czech Republic in 2019, fueling the market's expansion. Additionally, improvements in wearable technology, such as biometrics, EMV-enabled wearable devices, and contactless payments, are predicted to drive the market's growth over the projection period.
High Costs of Wearable Devices
The high cost associated with wearable devices has restrained individuals and businesses from adopting these devices, which hampers the market's growth. In addition, various fees are associated with the services related to wearable devices and contactless payments, such as maintenance, integration, and upgradation. Moreover, the initial price of manufacturing wearable devices is high, incurring additional costs, which hampers the market growth. Furthermore, producers of wearable devices have to spend considerable money on research, marketing & promotion, shipping, licensing, software, and development of wearable, due to which the cost incurred is substantially high, thereby limiting the global market growth.
Increase in Use of NFC, RFID, and Host Card Emulation Technology In Wearable Payments
Different wearable payments and contactless payments utilize NFC and RFID as essential components. The development of contactless cards and wearable devices by many manufacturers, including Apple, Samsung, and Huawei, uses NFC and RFID technologies, which are projected to provide lucrative chances for global market expansion. Additionally, many businesses are implementing host card emulation and NFC technology to give their customers simple access to the merchandise displayed on their smartphones. For instance, KFC launched an NFC-based advertising campaign in the UK in 2019. The campaign's main objective was to publicize KFC's Hot Shots Meal Box. Customers can place their orders by tapping an LED screen with NFC-based technology. KFC launched this service to encourage home delivery services and broaden the use of contactless payment methods. In addition, businesses are using host card emulation technology in their wearable devices to empower wearables and boost the performance of various mobile and wearable devices, which is a potential growth prospect for the industry.
The global wearable payments market is segmented by device type, application, technology, and region.
By device type, the global wearable payments market is fragmented into smartwatches, fitness trackers, payment wristbands, smart rings, and others. The smartwatches segment was the highest contributor to the market and is estimated to grow at a CAGR of 21.2% during the forecast period. The market is anticipated to grow due to rising consumer demand for wireless fitness and sports equipment, a rise in consumer health consciousness, and technological developments in smartwatches by market participants. Furthermore, an increase in emphasis on connected devices among various industries and a surge in demand for connected ecosystems are expected to offer lucrative opportunities for the market. Moreover, monitoring and measuring physical activities, sensing the environment, real-time data collection and communication are some of the major applications which are essential features that drive the growth of the market. In addition, the increase in the adoption of AI-based smartwatches in the healthcare sector for monitoring patients' health and diagnosing various health issues is expected to provide a lucrative opportunity for the market.
The fitness tracker segment is the second largest. An increase in the incidence of chronic diseases and a rise in awareness about fitness among youth drive market growth. In addition, the demand for fitness trackers is predominantly driven by the adoption of advanced technologies such as IoT and machine learning in fitness trackers and the economic growth of the developing economies of Southeast Asia & others of Asia-Pacific, the Middle East & Africa, and China. The market is growing due to numerous health problems like cancer, high blood pressure, and obesity in developed North American countries. In addition, fitness trackers help end users track their fitness parameters and analyze and record their activities, calories burned, and heart rate. Thus, all these factors together augment the growth of the global market.
By technology, the global wearable payments market is segregated into near-field communication technology (NFC), radio frequency identification (RFID), QR & Bar code, and others. The near-field communication segment was the highest contributor to the market and is estimated to grow at a CAGR of 24.5% during the forecast period. The surge in adoption of smart devices globally and the increase in penetration of online consumers in developed and developing nations drive the market's growth. Moreover, an increase in the need for enhancing the payment infrastructure and a rise in government initiatives for promoting contactless payments boost the development of the market. Furthermore, various banking and FinTech industries are developing and deploying NFC technology in their new products to increase payment security and customer experience.
The Radio Frequency Identification (RFID) segment is the second largest. The surge in demand for RFID technology in manufacturing and automotive industries for improving the productivity of organizations and employees drives the market's growth. In addition, an increase in demand for RFID tags and sensors in the retail industry, owing to the extensive use of smart cards, access control, and other NFC applications, is expected to fuel the market's growth. Furthermore, RFID technology helps industries efficiently manage the supply chain process cycle of the company, which boosts the demand for this technology. In addition, governments of various countries are installing RFID technology in public transport and the healthcare sector to improve the lifestyle of people and increase the security & safety of their countries.
Moreover, the high adoption of RFID sensors in the retail industry and the rise in government mandates for the use of RFID tags for tracking various industry products, such as defense, livestock, and data centers, are expected to provide lucrative opportunities for the market.
By applications, the global wearable payments market is segmented into grocery stores, bars & restaurants, drug stores, entertainment centers, and others. The grocery stores segment was the highest contributor to the market and is estimated to grow at a CAGR of 20.2% during the forecast period. The surge in penetration of wearable devices among end users and rise in penetration of QR codes on various grocery shops for improving the customers' overall experience drive the market growth. In addition, multiple retailers across the emerging countries of Asia-Pacific, such as China and India, are adopting contactless smart cards for their customers, owing to its numerous benefits, such as improved operational efficiencies, better customer satisfaction, upsurge the revenue, and lower operating cost. Furthermore, many grocery owners and retailers across the globe are adopting advanced technology-based contactless and wearable payment systems to upsurge their profit margin, boosting the market's growth.
Region-wise, the global wearable payments market is analyzed across North America, Europe, Asia-Pacific, and LAMEA.
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Europe was the highest revenue contributor and is estimated to grow at a CAGR of 19.2%. Due to increasing wearable device demand in countries like the Netherlands, the United Kingdom, Russia, Germany, and Italy and increased internet usage in the region, Europe now dominates the wearable payments market. Additionally, a rise in end-user awareness of wearable payments' benefits over conventional payment methods in European nations promotes industry expansion. The need for wearable payment is also increasing as the number of contactless payment users and shops in the area rises, fueling the market's growth. Due to contactless payment's sophisticated capacity to process payments with a single click, more than 615 European in-store establishments have accepted it as of 2019. This is according to a Mastercard survey. Many European businesses are also pouring money into the development of wearable technology, including POS systems and NFC technology, which is expected to open up lucrative market potential. Additionally, it is projected that market growth would be fueled by the rising use of contactless payments in places like gas stations, toll booths, ticketing devices, and vending machines.
Asia-Pacific is the second largest region. It is estimated to reach an expected value of USD 830 billion by 2030, registering a CAGR of 21.9% during the forecast period. Factors such as a rise in population, rapid digitization in the payment industry, an increase in urbanization, and an improvement in the economy are expected to boost the growth of the wearable payments market in Asia-Pacific. In addition, South Asian countries have a substantial underbanked population, rapidly adopting contactless and cashless payment systems, thereby boosting the market's growth. Furthermore, the rise in e-payments, contactless payments, and online payments in China and Singapore is driving the market's growth.
North America is the third largest region. The wearable payment market is growing faster in North America, owing to high spending on advanced technologies and regional network architecture. In addition, the rise in the adoption of wearable payments and contactless payments systems by various retailers and manufacturers in the U.S. and Canada to improve customer experience and provide a secure, safe, and faster transaction method drives the market's growth. Furthermore, the increase in the adoption of contactless payments technology by various customers for small-value transactions is boosting the market's growth. In addition, multiple banks and FinTech industries in the U.S. have introduced NFC-enabled devices for their customers, which is anticipated to provide a lucrative opportunity for the market.