Bankers in Australia have something new up their sleeves: a reloadable prepaid card.
Heritage Bank in Australia recently teamed up with Japanese clothing manufacturer MJ Bale to do something unexpected: thread its contactless payment chip and antenna into a dozen suits. In so doing, the wearer can use his sleeve to pay for transactions under $100 and can load up to $1,000 into his account.
The wearable computing prototype is meant to make transactions faster than paying with a card or cash. The power suit is the latest example of a bank exploring a nascent tech category that is expected to become popular with consumers.
Sure, wearable computing is still in its infancy and consumer adoption is low. But it is a facet of the broader trend of "internet of things" that is expected to generate a lot of money. Indeed, McKinsey Global Institute forecasts the internet of things will have a potential economic impact of up to $6.2 trillion annually by 2025.
Some U.S. banks have experimented with wearable computing in recent months. Wells Fargo & Co. and U.S Bank, for example, have been working on apps for Google Glass and the Samsung smart watch. To begin with, their apps would allow customers to do simple things like check account balances with a tap or an eye blink.Then, U.S. payments-related companies such as LevelUp and Wallaby have launched apps for Google Glass and smart watches from Samsung and Sony.
More tests are expected to come as the tech matures and consumer adoption grows.
"I think we will see a variety of tech and wearable payments come to market," says John Williams, chief operating officer at Heritage Bank.
The bank's "power suit," which it refers to as "wearable computing that a gentleman would actually wear," is quicker than other forms of payment because a person need not pull out a wallet or phone. Transactions less than $100 don"t require the customer's signature or PIN, a flexibility that allows Heritage Bank to create the suit payment experience it wanted: wave a sleeve within four centimeters of a terminal for half a second, and voila, the transaction is done. Near-field-communication, technology based on a set of standards that has yet to take hold in America, is what lets the card speak to the Visa payWave terminal.
To be sure, the suit is still an experiment. But Williams says the bank's customers have expressed interest in it and exercise companies have approached Heritage to talk about similar deals. The suit manufacturer, meanwhile, will decide whether or not to grow out the suit pilot.
MJ Bale approached the bank in January to work on the suit, which then debuted in the spring. It is but one new idea the bank is testing in a digital age.
For a much larger intended user base, Heritage Bank is readying a mobile payments app. The app, designed to run on Samsung mobile devices, will use NFC to let people make purchases. The bank plans to open the test up to 1,000 people in the upcoming months. The ultimate goal is to help inspire people to convert from paying with cash — a widely used payment for transactions under $35 in Australia — to using smartphones to transact.
Arguably most important for the near-term, however, is Heritage Bank's work to create branch of the future concepts. Like most American banks, Heritage aims to transform its brick-and-mortar locations into sales and services hubs at a time when transactions are increasingly taking place through online and mobile apps.
Regardless of the tech project, Williams says the technology itself is the easy part. Less easy is applying it within financial services.
"As an organization, it's adopting digital disruption in society in general and applying as best as we can within a banking environment," says Williams.