If it's not a revolution, then it’s a rapid evolution. Wearable devices are gaining traction, a trend showing up in some recent numbers and earnings reports. Consider the fact that Apple is now the biggest watchmaker in the world, as evidenced by its first-quarter data, and 50 percent of smartwatches in the market come from that tech giant.
Garmin, too, said earlier this month that its wearables sales were up 24 percent year on year.
If adoption is increasing, so too are the ways consumers can fit those devices into their daily lives.
TBD is nothing if not about topics of timeliness—and in the latest Topic TBD, FitPay CEO Mike Orlando told Karen Webster that lines are blurring in what the devices can do, and what they might do in the future.
From device to data conduit, one might call it.
But as with anything data-related, and beyond the hardware, security is top of mind.
The overarching theme in transactions, wrought via wrist – whether payments or payloads of personal ID, as Webster noted – is not just about the consumer experience, but also about enabling the consumer experience in a way that preserves the safety and security of the individual’s information, regardless of use case.
The recent results from Apple and wearables peers, said Orlando, shows “the demand is about the functionality that is coming to wearables."
The segment has moved beyond fitness trackers, which Orlando said drew users but had limited utility. Now the wearables “are bringing a lot of information that people were accustomed to getting from their smartphones, but they are also delivering an application ecosystem where consumers can consolidate different types of activities and bring different applications off of their phones and have a wearable device that gives them far more utilities and far more use cases – and payments is one of them.”
Want an analogy? Think of the first mobile phones, the flip versions, that have evolved into the smartphones of today, offered Orlando.
Beyond the fitness offerings that launched the segment and are still growing, Orlando said that another market poised for explosive growth lies in healthcare. After all, as he noted, data exists and traverses devices of all types in doctors’ offices and beyond, making it a natural fit for wearables, as they can help inform both the consumer and the healthcare provider.
“It’s not so much a diagnostic decision as it is about real-time information [about] how that person managed their sleep, their health, their medications throughout the days or weeks,” he said.
A bigger area than both fitness and healthcare will be enterprise and industrial, projected Orlando – stretching across manufacturing activities and distribution and logistics.
Across all of these arenas lies the collection and dissemination of data, as Webster noted – and thus the door opens, and widely so, for tokenization and data accessibility in a way that remains secure.
Orlando said that the general premise of tokenization as part of the payments process – as a secure way of storing a credential – allows disparate types of data to be mixed.
“Along different continuums, you can link data together,” he told Webster. “You can have payment data that can be linked to your insurance data that can then be tied to your FSA account.” That payment-related data could conceivably be tied to yet another key that unlocks a broader record of patient details.
“What is important for us to think about is that today, the token systems are issued and managed by providers, and we really see over time where the consumer or the owner of that data becomes the issuer and provider and authenticator of that data,” Orlando added.
Along with the concept of data continuums comes the need for interoperability, as tokens must be accessible to the users who need them.
Thus, said Orlando, standards are paramount – agreements between stakeholders made in collaborative effort that dictate when information can and will be shared.
There’s precedent here, of course, as banks and issuers have come together to create a unified way of tokenizing, across all the networks. And, as Orlando noted, Visa, Mastercard, Discover and American Express have all linked with security protocols.
“I think you'll begin to see that type of [collaborative] activity happen across healthcare providers and other types of credential management organizations, where they see that the benefits of security, access and utility outweigh their need to compete against each other,” he said.
Webster posited the need for a control tower of sorts, as commerce extends across so many far-flung, connected end points. That can be done through credentials, said Orlando, with keys in place that can be unlocked and shared. Blockchain offers another way for that functionality as a result of the decentralized ledger function. The technology, then, is in reach as the use cases evolve, said Orlando.
The tokenization model itself may evolve into one that is more standardized, he said. He offered up the healthcare model, where patient account (PAN) data is stored on a merchant's or provider’s website, or at a payments processor, and that data is extracted at various points. Standardized processing (or smart tokenization) may eliminate the need for a PAN, Orlando noted – in essence, negating the need for de-tokenizing and re-tokenizing data.
Control then shifts to the consumer with a “universal” token – the premise behind Secure Remote Commerce (SRC), which is intended to promote portability and interoperability among card brands and issuers, replacing the current account card on file configuration.
It will take time to get there, said Orlando – several years, perhaps, but inside of a decade.
Merchants will get on board as they find the value and peace of mind that accrues with mitigating the risk of fraud, he predicts. His own firm’s roadmap is one that continues to pursue frictionless, personalized commerce for consumers, allowing them to pay how they want to pay. The overarching theme is a secure tokenized experience wherever they shop, across eCommerce, point of sale and mobile — “and doing that in a way where we are leveraging the systems the payment networks have provided and providing those to others, whether they are technology providers or other service providers, in a sensible way to accelerate the [wearables] timeline.”
They are the connector, Orlando said: “We play that role between the entities that are the generators of these tokens, and … how they get personalized on a device down to the end user, [whether that's] a consumer, a merchant or a payments gateway.”
Though the use cases are fragmented at present, the tokenized model can be proven across broad ecosystems, and beyond device-specific boundaries.
“We see this extending to whatever credentials the consumer and the user wants to own and hold and share,” he said. “Now our identities are our data.”
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