New 'Smart Rings' Need More Polish as Wearable Payment Tech

The several wearable computing rings being developed have been well-received, but the small devices could have hardware limitations that keep them from widespread use as a payments tool.

NFC Ring, which uses contactless Near Field Communication technology, ended its Kickstarter campaign in mid-August with more than £241,000 pledged to the project.

The U.K.-based company recently opened up pre-orders to Bitcoin users only during Bitcoin Black Friday, a play on the post-Thanksgiving shopping event.  That day, NFC Ring sold about 200 of the approximately 10,000 rings ordered so far.

The NFC Ring "can be used as a second form factor for authenticating with some Bitcoin wallet third-party apps," says John McLear, managing director of McLear Ltd. and self-proclaimed stormtrooper at NFC Ring.

"All of our prototypes we have made are relatively insecure and depend on a trusted wallet," McLear says. "We have sent out 100 or so developer rings to Bitcoin evangelists and developers and we're excited to see what they make over the next few weeks and months."

NFC Ring is an open source project, meaning that anyone can write software code to change the way the ring is used.

NFC Ring is also looking to get EMV certification from MasterCard and Visa.

"We don't yet have EMV certification to use the ring as a MasterCard/Visa application so payments are limited to custom solutions being integrated by Bitcoin and other providers," McLear says. The ring can then be used as a second form factor for authenticating payments, he says.

"I'd just like to do micropayments (under $20) for beer and stuff," McLear says. "But I don't see the ring being a single secure payment mechanism for a few years at least."

Currently the ring can be used to unlock a user's smartphones, high-tech doorknobs and other NFC devices. It can also transfer data such as contact information to other NFC devices.

"Payments is a byproduct and not something I'm overly keen on working on due to the level of regulation and restrictions and the general negative image shrouding the finance industry," McLear says.

Several mobile wallets, including Isis and Google Wallet, focus heavily on NFC technology. These apps typically require the user to unlock the phone before initiating a contactless payment.

There has been a recent influx of support for smart rings, based largely on the publicity surrounding the products' crowdfunding campaigns, says Ryan Martin, an associate analyst at The Yankee Group.

While there is consumer interest in these devices, incumbent technology companies like Samsung and Google haven't developed rings of their own, he says.

The "restrictions are in the hardware in terms of battery life and what you can fit in that type of package," Martin says. And the two options for technology to facilitate payments are either NFC or Bluetooth Low Energy, "which are nothing really special because those are technologies already embedded in other devices consumers will be carrying around anyway," he says.

But if transaction speed is a pain point for merchants and consumers, rings could decrease the amount of time people spend at the point of sale, says Nick Holland, senior payments analyst at Javelin Strategy and Research.

"As cloud-based computing and ubiquitous connectivity continue to grow, why not have wearable computing?" says Holland. "It may simply make more sense to have authentication embedded in a ring than on any other device since we typically use our fingers for interfacing with payment devices."

Smarty Ring is another wearable technology that is finishing up its Indiegogo crowdfunding campaign on Dec. 12.

Smarty Ring notifies users of incoming or outgoing calls, alerts them of text or email messages and provides real-time social media updates. The product, which is still conceptual, is also meant to control music and trigger a smartphone's camera.

Unlike the NFC Ring, Smarty Ring would be managed from a smartphone app. Smarty Ring did not respond to a request for comment.

Wearable computing technology has expanded greatly this year with the launch of several smartwatches and a limited distribution of Google Glass, a computing eyewear with head-mounted display. Google Glass and its app store will be available to the general public next year.

Several payments companies have already started to explore the ways they can use Google Glass. MasterCard Inc., for example, is building payments capabilities for Google Glass, combining the eyewear with its MasterPass digital wallet and QkR, a QR code-based mobile payment app.

LevelUp, ZooZ and shopkick are also experimenting with ways their technology can integrate with Google Glass. Intuit has adapted its GoPayment mobile card reader for use with Google Glass and RedBottle Design LLC recently created GlassPay, an app that enables bitcoin payments from Google Glass.

Smartwatches also gained momentum this year.  Chattanooga, Tenn.-based TransCard LLC is working with Watch2Pay LLC to provide U.S. banks with wristwatches that have built in MasterCard PayPass contactless chips in them. The watches will be linked to a prepaid account to make purchases at the point of sale.

Samsung released its Galaxy Gear smartwatch with NFC capability, but it's still unclear whether the device will be widely used for payments.

In August, Apple acquired Oakland, Calif.-based Passif Semiconductor Corp. and its patents. The acquisition gave fresh credibility to rumors that Apple was developing an iWatch that would include payments functions. Google is also rumored to be building a smartwatch.