Have you ever wondered how Smartwatch payments work? | NTT DATA

Thu, 17 June 2021

Have you ever wondered how Smartwatch payments work?

Let’s start with the basics. Please note that Smartwatch payments or Wearable payments terms might be used indistinctly. From a User Experience perspective, you may already know that the renowned fruit logo watch payments work in a similar way as contactless payments done with a Debit or Credit card: to launch the payment-ready mode and use your default card you just need to double-click the side button, hold your watch near the contactless reader (POS) and wait until you feel a tap on your wrist, meaning the payment initiation was successful. Then, depending on the shop and the transaction amount, you might need to sign a receipt or enter your PIN on the contactless reader. Watches based on other operating systems might work in a slightly different way, such as using a PIN inside the watch as a security measure instead of entering the card PIN on the POS pin pad, but the essentials are the same. As easy as it sounds!

So, the question is, is my card really inside my watch? The answer is yes and no. Once you activate the card selection screen, you will see a small icon with your Bank’s card design as well as your masked card number in “**** 0000” format, being 0000 the last 4 digits of your card. But what you are really seeing is a representation of your physical card. What you see in your watch is something called a “token”, which is a virtual clone of your card that along with the Near Field Communication technology, makes wearable payments possible. There are different methods to implement a token, such as the Host Card Emulation (HCE), which virtualises the card on the Cloud; or Tokenization, which virtualises the card physically stored inside your watch.

So, that’s it? “Customer: the last time I tried to add my card, I got an error message saying that my Bank was still not supported”. It is true that in order to add a card, your Bank (among other things) has to sign a contract with the watch provider, do some configurations within their internal Payment Systems and deploy new Software to finally be able to support wearable payments. Once all tests on both ends are successful and the wearable payments are ready to Go-Live, then you may receive a message informing you that from that moment on you can do payments using your watch.

The final step is to add your card to your watch. This process is called “Card Enrolment”. It normally happens through a payments option enabled on your mobile phone, where you can scan the card adding the required data or add it manually: typically, your name, card number, card expiry date, and the three numbers shown on the back of your card (CVV/CVV2/CVC number). If all data is confirmed by your Bank, then a long Terms & Conditions small print is shown to formalise the agreement to start using your watch as a means to do wearable payments. If successful, you will get a confirmation message and/or you will see your card directly in your watch payments option.

Smartwatch payments are indeed an innovative, secure, and handy payment method ever since its launch back in 2016. Banking transactions experienced a significant increase in their revenues just weeks after its implementation. However, 5 years on, I can still find people wondering how is it possible to pay for their groceries without a physical card. So, in case you haven't tried it before, I highly encourage you to try Smart Watch payments and share your experience. I'm positive you'll love it!

And that’s all you need to know to start being a Wearable payments expert!


Related Insights


How can we help you

Get in touch