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Major fashion brands Kate Spade and Michael Kors introduced second-generation smartwatches that feature NFC capabilities at the 2019 Consumer Electronics Show (CES) in Las Vegas earlier this week, according to The Verge.
Both brands' smartwatches are made by US fashion company Fossil, which has also been pursuing the wearables space through its own line of NFC smartwatches.
Both firms upgraded their watches to add payment capabilities. Kate Spade is launching the Scallop Smartwatch 2, its second touchscreen smartwatch that will include features like NFC payments, a GPS, and a heart rate monitor â€” all of which its first smartwatch did not include.
The watch runs on Google's Wear OS, its operating system for wearable devices, allowing users to access Google Pay, Google Assistant, and Google Fit. Michael Kors launched the Access Sofie 2.0, which offers NFC payment capabilities through Google Pay, a heart rate monitor, and a GPS.
Mainstream fashion brands integrating payment capabilities into their watches can aid in streamlining wearable payment adoption in the US.
Wearable payments are poised to take off in the US, but firms can take several steps to push adoption. Business Insider Intelligence expects US consumers to spend $3.5 billion on wearables by 2023. But some consumers are hesitant to buy payments-specific wearables, but would be interested in contactless payments that are integrated into existing devices, according to a Barclaycard study. Integrating payment functionality into an everyday watch, rather than making a wearable band specifically for payments, can appeal to consumers. And to encourage usage, it's also important for watch manufacturers to highlight these new features and educate customers on how to use them.
Google Pay can continue partnering with watchmakers to boost its performance.Partnering with wearable device manufacturers to grow market share, onboard new users, and gain volume could be a smart strategy for payment providers as demand increases. This is particularly true among popular fashion brands, as their customers might be the same audience payments firms are going after: Nearly 60% of Kate Spade's customers are millennials, who are most likely to use wearables. Mobile wallets in the US have seen stagnant performance, with Google Pay falling behind: The mobile wallet accounts for just 6% of debit card transactions made on mobile wallets in the US, compared with Samsung Pay's 17% and Apple Pay's 77%. Therefore, applying its capabilities to a new form factor can allow Google to open up another source of volume in the US as wearable payments take off.