Wearable payments are a slowly growing trend. Fitbit, the maker of wearable exercise monitors, wants to become an indispensable part of your lifestyle. Toward that end, it announced on May 18 the purchase of a wearables payment platform from Coin, a maker of smartcards.
The deal gives Fitbit the potential to sell devices that can count the number of miles you run and also allow you to purchase a new pair of running shoes through a contactless transaction.
Coin is a 4-year-old Silicon Valley startup that sells smartcards allowing consumers to make contactless payments using Near Field Communication (NFC) technology. It sold out its latest payment card, Coin 2.0, and will no longer offer smart-payment products.
Fitbit said that it doesn't expect the acquisition to result in new devices this year. However, the new technology should greatly accelerate Fitbit's efforts to embed contactless payment services into its wearable fitness devices.
Apple Watch already offers wearable payments, although sales of the device have been underwhelming to date.
According to a 2015 survey from Mercator Advisory Group, 53 percent of consumers who have purchased or plan to buy a wearable device consider payments to be an important service. That represents a 3-percentage-point increase from 2014 survey results.
In a press release, Fitbit CEO James Park indicated his intention to convince consumers that owning one of the company's devices was indispensable to their lifestyles, and that including payment technology in Fitbit products would further the company's strategy.
The acquisition represents a big bet on NFC technology, which is a set of communications protocols designed to establish a link between devices that are within about two inches of each other.
NFC-enabled devices like contactless credit cards and NFC-enabled smartphones and smartwatches, can act as mobile wallets that permit contactless purchasing at locations with suitable sales terminals.
Apple has adopted NFC technology for its iPhone 6 and Apple Watch products. Google Wallet and other mobile payment providers have jumped onto the NFC bandwagon in the last 2 years.
But NFC technology is not without its hazards, and there are a few things you should know before you begin paying with a bracelet instead of dollars. Contactless systems with NFC technology address security concerns in several ways.
We at GET.com have listed the 4 most plausible NFC hazards:
Some criminals might be tempted to capture details of contactless transaction and steal private information. NFC thwarts this by its very short broadcast range and the use of encryption. A thief would have to stand over you and be able to decode your transaction in order to extract any value from the crime.
A person might try to corrupt or manipulate data transmitted from a smartphone to a reader. NFC devices can fight this mischief by using secure channels and by listening for, and preventing, data corruption attacks.
A sophisticated variant of data corruption, an interception attack occurs when a criminal's device sandwiches itself between your payment app and the transaction reader. This can be prevented by permitting only one-way communication, a configuration called active-passive pairing.
By using a PIN or password, you can make it much harder for someone to benefit from stealing your payment device. Some devices lock up after a series of invalid password attempts.
Payments made using contactless payment apps and devices are normally funded by linked debit cards, credit cards, gift cards and prepaid accounts. Most of these apps do not offer rewards like those available from credit cards, and using them can void any credit card rewards you should have earned on the transaction.
Luckily a few of them, including Apple Pay, do let you earn credit card rewards as you would normally.
Looking to save more with a rewards credit card? It pays to shop around using a credit card website like GET.com.