For serious athletes looking for a fitness tracker, Garmin (NASDAQ: GRMN) is a go-to device maker. The vivoactive 3 tracker released last year has just become immeasurably more vital with the addition of Wells Fargo (NYSE: WFC) to the lineup of contactless payment partners that Garmin Pay utilizes.
“Wells Fargo’s more than 21 million mobile banking customers expect to make payments when and where they want, and wearables like vívoactive 3 with Garmin Pay technology help enable their active lifestyles,” Jim Smith, head of virtual channels at Wells Fargo, was quoted as saying in a press release.
The wearable device market continues to grow, with the researchers at IDC forecasting wearable shipments almost doubling by 2021, growing from 113.2 million devices to 222.3 million. It also expects smartwatches like the vivoactive 3 and Apple’s (NASDAQ: AAPL) latest Watch iteration to far surpass the basic wristbands that dominate today. Watches (basic and smart) are on track to grow from 61.5 million units today to 149.5 million in 2021, while basic wristbands will only increase to 47.7 million from 45 million, according to IDC.
But where wearables have enjoyed considerable growth, the same can’t be said of mobile payments. Even Apple CEO Tim Cook had to admit he wasn’t able to “kill cash” quite as readily as he thought when Apple Pay was introduced. At Apple’s annual shareholder meeting this month, he was sounding less confident about the prospects for cash’s demise, even as the company introduced Apple Pay Cash, person-to-person money payment option.
No doubt the trend toward multipurpose wearables will benefit Apple, but it also ought to help others like Garmin, particularly as it increases the functionality of its devices.
All the payments fit to make
The vivoactive 3 made a big splash when it was released last year, as it featured contactless payments through Garmin Pay for Mastercard and Visa cardholders. Garmin Pay is powered byFitPay, the wearables payment technology subsidiary of Nxt-ID, which uses tokenization technology that replaces cardholders’ account information with a unique digital identifier.
Garmin Pay using FitPay enables consumers to simply tap and pay at NFC-enabled point-of-sale terminals or ATMs using an existing credit, debit, or prepaid card account.
The addition of Wells Fargo adds another layer of usefulness. First, the bank is the third-largest bank in the U.S., making the payment feature available to lots more people. Wells Fargo has more than 21 million mobile banking customers, and if they make a payment with Garmin Pay using their Wells Fargo cards, their transactions will be monitored with the bank’s risk and fraud detection systems.
Watch Garmin grow
The growing availability of payment options open to wearables users means now could be the time contactless payments take off, since the process is much faster than with EMV chip cards, which have never really been popular with consumers. An EMV transaction takes approximately 30 seconds to complete — an eternity when you’re standing at the register — while a contactless payment takes about 13 to 15 seconds, according to creditcards.com.
Although Garmin is the fifth-most-popular manufacturer of wearables, according to IDC, its market share in the space had slipped to 4.9% in the third quarter of 2017, from 5.4% in the previous year as shipments declined by more than 3%. The companies with top market share were Fitbit and Xiaomi, both at 13.7%.
However, with the vivoactive 3 out and a growing list of partners that athletes can use to make mobile payments, Garmin could see its payment service become an integral part of its business.