Paying for things with your smartphone is pretty cool, but imagine if you could buy a cup of coffee using signals transmitted from a ring that you wear on your finger. If Visa (NYSE:V) has its way, that's all you may soon need.
The credit card company has developed a wearable ring backed by a Visa account that can be used to make purchases. To promote it, Visa is distributing them to athletes that will compete at the upcoming summer Olympics in Brazil.
The ring purportedly works in much the same way that a smartphone does insofar as payments are concerned, using near-field communication (NFC) technology that connects to a store's credit card reader. A microchip in the ring with an embedded NFC-enabled antenna makes this possible.
All you'll need to do to make a purchase, says Visa, is tap the ring at a NFC-enabled payment terminal.
"Visa's first payment ring puts smart payment technology right on the hands of our athletes for convenient and easy payments," said Jim McCarthy, executive vice president of innovation and strategic partnerships at Visa. "This ring is the latest example of how Visa is continuously innovating to deliver on its goal of universal acceptance at the games and across the world."
To top things off, the ring provides a more secure way of making a payment than with a credit card. It does so through the use of token technology. This replaces sensitive payment information, such as the 16-digit account number associated with your credit card, with a unique digital identifier that can be used to process payments without exposing your account details.
And if that isn't enough, the ring doesn't use a battery, nor does it require you to recharge it. It's also water resistant up to 50 meters.
I wouldn't go so far as to say that this is a game-changer for Visa. Who knows if it will even take off, despite Visa's marketing efforts centered on this summer's Olympic games. But this shines a light on the amount of innovation and creativity that's present in the payments space today.
You have companies like Square that have made it easier and cheaper for individuals and small businesses to process payments. The iPhone and various Samsung phones also have payment platforms that can be accessed through their smartphones.
Then you have companies like Fitbit and Under Armour that are aggressively pursuing wearable technology to track your health and exercise routines. The Visa ring, it seems, draws its inspiration from all of these approaches.
I'm not the type of person who will go out and get one of these as soon as they're available, but if they gain traction with consumers it could help Visa take market share away from the likes of American Express and Discover. In a field that's as crowded and competitive as payments, even an incremental boost in market share could be considered a victory.