Swiss watch manufacturer, Swatch SA has announced that it will be collaborating with card company Visa Inc (NYSE:V) to launch a payment service called “pay-by-the-wrist.”
The partnership is aimed at taking advantage of the growing mobile payments industry that is currently in its early stages. The two firms also plan to leverage technologies such as Near Field Communication, which is the same technology that mobile payment services such as Apple Pay and Samsung Pay have adopted.
The joint venture will be advantageous for the two companies in terms of widening their scope. The watch company stands to benefit through the creation of more value and utility for their products. This move is expected to boost sales through an interesting blend of style and technology for the wearables market. Visa, on the other hand, will benefit from a larger customer base.
The move is also advantageous for the competitive strategies of both companies in their respective markets. The wearables market has become more competitive over time especially with the entry of smart watches from smartphone manufacturers. “Pay-by-wrist” will thus allow Swatch to compete more effectively against the growing competition. One of the major limitations that the competitors have faced is the battery life. It will, therefore, be exciting to see how Swatch tackles this problem while incorporating NFC chips into their watches.
Visa will use the opportunity to begin expansion into contactless payments. The company’s direct competitor, Mastercard Inc (NYSE:MA) has already made numerous partnerships in the mobile payments market. Visa is therefore expected to reveal similar partnerships in the future as far as creating a solid foundation in the growing mobile payment market is concerned.
The “pay-by-wrist” technology is expected to appeal to customers because of its effortless nature and easy functionality. The current trend in mobile payments suggests that more gadgets will host the technology.
Soon enough, rings will also join the trend. Analysts expect the mobile payments industry to be worth trillions in the next five to ten years. Tech firms and card companies are positioning themselves to be part of the potentially lucrative industry in order to reap heavy gains. The technology will also make global payments much easier.
Sources: reuters, venturebeat
