Watches that pay their way, contactlessly


As payment goes contactless one inventor has been busy creating a payment watch endorsed by Mastercard, dubbed perfect for work, travel and keeping an eye on your kids’ spending. Kathryn Bishop meets its creator Lucas Scheybal.

Many of us will recall the Barclaycard advert with the man speeding through New York a on rollercoaster, but were you aware that he was paying for things with a tap of a card as he sped, picking up a coffee as he went?

The growth of contactless payment technology in the UK – whereby you simply tap your bank card on a payment screen to pay – seems to have arrived in somewhat of a whirlwind, despite existing for several years already. To date, this contactless technology has mostly been restricted to the bank cards themselves, with the recent arrival of new contactless payment technology such as the Barclays Pay Tag, a little sticker that can be stuck onto your mobile phone housing a chip akin to that in a typical bank card, thus eliminating the need to carry around a wallet full of change and cards.

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Watch2Pay is a new product on the contactless payment scene that hopes to add a whole new dimension to the process, making the technology appeal to a new generation of consumer by presenting itself as more of an accessory.

The range of watches is the brainchild of Austrian innovator Lucas Scheybal, founder of watchmaking company LAKS. His Watch2Pay timepieces house quartz movements and a SIM-sized card held in a small slot in the side of the watch that can be topped up with cash, enabling the wearer to pay for items with a tap of the watch on a contactless pay screen.

Scheybal has more than 25 years’ experience in the watch industry and has previously created other innovative timepieces such as the first MP3 player watch, the first watch with a USB drive and connectivity, and a DVB-T timepiece that allows the wearer to watch TV on a Mac or PC through a tuner within the watch.

The Watch2Pay is LAKS most recent creation, beginning life in the mid-2000s when Scheybal met with Mastercard to talk about developing a watch with a contactless payment chip housed within the case.

“LAKS has been developing for the past 15 to 16 years, creating additional technology for watches,” he says. “We developed seven prototypes of the Watch2Pay which have evolved as the contactless technology has changed.”

Scheybal explains that LAKS originally went to Mastercard with an all-singing, all-dancing watch that included many additional features beyond contactless payments but the finance brand asked for something much simpler.

“We’re the only brand with patents [for the technology] and while we’ve previously developed watch products for other companies this is the first time we’ve made something for ourselves,” explains Scheybal. “All of the research and development has been done at our headquarters.”

Mastercard was interested to find out more about the idea and began liaising with Scheybal, who adapted some basic prototypes.

“The original product was about five years too early for Mastercard so we had to change the specifications, downgraded it in many ways to make it more accessible to the average consumer,” he explains.

After stripping back the design, the Watch2Pay now exists as 38mm steel and coloured silicone watch with a date movement that Scheybal says took about eight months to integrate into the watch.

The first Watch2Pay watches were distributed among employees at Mastercard to try out and identify any bugs. Eventually a pre-pay system was decided upon for the Watch2Pay system, endorsed by Mastercard and allowing wearers of the Watch2Pay to electronically top up cash to the watch through an online transfer akin to making payments through online banking.

Changes to the terms of contactless payment this year have meant that, since June 1, each individual transaction made using contactless technology can total up to £20, making, says Scheybal, the concept of the Watch2Pay ideal for a number of situations — nights out, travelling in a big city or for your children, so you can track and limit how much they are spending.

But why has the brand chosen to launch in the UK this year? “We’re launching here for a number of reasons,” says Scheybal. “Visa is really pushing contactless payments for the Olympics, so this will have already raised awareness among shoppers.”

Indeed, Visa’s advert featuring champion sprinter Usain Bolt paying for clothing, travel and more with a tap of his Visa card is a play, ultimately, on the speed, ease and freedom of use of the contactless payment method.

“In the last few months about 1,200 stores in the UK have added contactless payments to their storefronts,” notes Scheybal. The main players leading the contactless charge are stores or fast food outlets where time is of the essence and queuing should be minimal, for example EAT, Boots, Caffe Nero and Yo Sushi — but even retailers such as the National Trust stores and Barnardos charity shops have got in on the action.

“Transport for London [TfL] is the next step for contactless technology,” reveals Scheybal. “TfL needs to certify it but once they do you will be able to use the Watch2Pay watch to travel on London’s underground and buses, touching in to travel using the watch.”

Other cities have been quick to take up the technology, with New York – the city that never sleeps and evidently never wants to wait to pay – installing contactless payment technology in 20,000 yellow cabs across the city.

Back in the UK however LAKS is making a push with its Watch2Pay models among retailers, notably gift stores and technology retailers. The Watch2Pay itself has a retail price tag of £99 which includes the watch, the card and other contactless payment components that allow you to set it up for immediate use.

“Though we’ve just launched in the UK it’s going good already,” says Scheybal. “I have had a lot of good meetings with a mixture of retailers and I’m also meeting some from jewellery stores, though right now we’re mostly targeting gift retailers.”

At present, among others, the brand has secured leading online gift sites and and is pushing the range at a young, busy audience, especially those who are regularly travelling – you can use the watch in a number of countries, essentially wherever the contactless technology is available – or want to go out without having to carry a wallet or cash. All they need is for contactless payments to be accepted at the various locations they are frequenting.

Scheybal comments that one way he has successfully marketed the Watch2Pay is simply by wearing it himself. He and his partner Bettina Gottfried travel wearing the watches and often target stores or restaurants where they know they can pay using contactless methods.

“When we travel people stop and ask us what the watches are,” explains Scheybal, who prior to our meeting popped into a central London McDonalds restaurant to buy a bottle of water, surprising the cashier who was intrigued by the payment method.

Does the brand or the watches ever receive any criticism or doubt, though, from consumers or those behind the till? “Most people seem to be more inquisitive than worried about it,” says Scheybal. And if anyone does pursue as to whether he really did just pay for something with his watch, he simply pops open the small side slot on the watch, revealing the Mastercard PayPass chip card.

“The only hurdle we face is every time someone asks us what the watch is,” he adds. “But it’s all about education for the consumer and it’s campaigns such as those on TV featuring contactless payments that help drive awareness.”

Next for the brand is the development of its product lines, which will include a more feminine take on its sizeable and colourful collection of watches, with the addition of Swarovski crystals.
“We’re following the rules of the big brands by playing with colours and trends,” explains Gottfried. “But one thing is a must — that all of the watches have the Mastercard PayPass and contactless wave logo branding on them.”

Does Scheybal feel that the product is potentially challenged, however, by the emergence of other contactless technology, such as the Barclay’s Pay Tag, which is indeed less intrusive than wearing a watch? “The Pay Tag is different as it’s more suited to impulse purchases,” says Scheybal. “If anything, its simplicity and ease of use is simply an awareness driver.”

In fact, when the product was still in its development stage, LAKS worked with a number of different banks, who were teaching their customers about contactless payments. Several of the banks presented customers with different modes of contactless payment including typical bank cards, the Watch2Pay and contactless stickers. The results showed that, after 12 months of spending, 45% had used the watch.

At present the Watch2Pay can have a standard maximum £1,500 of cash pre-paid onto the chip card, but a fully signed-up wearer can load up to £9,000 onto their wrist.

The product has had to win approval from the Financial Services Authority, the financial regulator for the UK, and the technology allows users to log in online to check their payments and track their spending, something Scheybal says has made the product appealing to parents, who can provide their children with limited access to cash, and can also keep an eye on where they are spending.

The watch has also won a spot in the British Museum – not in the gift shop as you might expect, but as part of an exhibition about innovation – where one of LAKS’ first Watch2Pay models remains.
It might only be six years since Scheybal and Gottfried first started their work on the Watch2Pay, but with it already housed in a museum, winning customers across the world and arriving in the UK at the height of the contactless push, the brand is right on time and right on the money.

This article was taken from the August 2012 issue of WatchPro magazine, out now. To view a digital version of the magazine click here.



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