Jawbone to take a bite of tap-to-pay market

Jawbone is moving to catch up with the Apple Watch by enabling its latest wristband to make payments in stores, through a new partnership with American Express.

The launch comes as analysts at NPD forecast the US activity tracker market will peak next year, as devices such as Fitbit and Jawbone's UP wristbands are displaced by smart watches such as Apple Watch.

A new version of Jawbone's UP will go on sale this summer that will allow wearers to pay using their American Express card by tapping the device against one of hundreds of thousands of wireless readers across the US.

Jawbone's future rests on how its UP wristbands fare against the likes of Fitbit and Misfit, as well as whether its slim design and long battery life can help to differentiate itself from Apple Watch, which starts shipping next week.

Apple Watch also allows wearers to use their American Express accounts, as well as Visa and MasterCard credit cards, for wireless payments through the Apple Pay system launched for iPhones last year.

Jawbone's system, which will initially be supported only by its $199 UP4 band, uses a combination, similar to Apple Pay, of "near-field communication" technology and secure "tokenisation" of card details, allowing wearers to pay with a flick of the wrist at the checkout.

"There is a lot of noise in the marketplace about different payment functions and features," said Leslie Berland, executive vice-president of digital partnerships and development at American Express. "We wanted this to be the simplest way to experience commerce . . . Truly payments are becoming invisible."

Jawbone's move into payments comes as a new version of its UP wristband, with a heart-rate reader and other new sensors, hits the market next week, four months behind schedule.

The company said the delay to the $179 UP3, originally intended to launch before Christmas, was due to problems achieving the waterproofing needed to enable it to be worn while swimming, a feature that was eventually scrapped.

"We are still light-years ahead in technology even though some time has passed," said Travis Bogard, Jawbone's vice-president of product management and strategy. "Nobody else has got close to what we are doing there."

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However, analyst projections for the fitness-wearable market suggest that the delay could compound pressure on Jawbone. NPD said that activity tracker ownership will peak at 32m in 2016 after four years of growth.

"The smartwatch will clearly begin to take a bite out of the activity tracker market moving forward," said Eddie Hold, analyst at NPD. "The fact that the health and fitness apps on smartwatches are a key marketing focus will help draw consumers away from the simpler trackers."

While Jawbone is focused on "lifestyle" uses of its bands, which are designed to be worn all day everyday, NPD says more sophisticated sports devices, with features for athletes such as GPS tracking, stand a better chance against general-purpose smartwatches.

The UP3's delays came amid growing concern about the state of Jawbone's finances, which the San Francisco-based electronics company hopes the launch of three new wristbands in coming months will put behind it. Flextronics, a contract manufacturer, sued Jawbone for $20m last year, alleging it failed to pay its bills. The case was settled out of court.

Jawbone has been linked with Google and BlackRock in recent months as it looks to raise hundreds of millions of dollars in new funding. The company declined to comment on its financing.

Founded in 1999 as Aliph, making wireless headsets for mobile phones and portable speakers, Jawbone moved into fitness trackers in 2011. However, the first UP was plagued by production issues, prompting a recall that held the device off the market for a year.

The UP does not use a backlit display like a smartwatch, making it more compact and enabling its battery to last several days.

The two top-end models track resting heart rate, at the moment the wearer wakes up, and will come in a variety of colours and materials.

"We think the shift is as big as that from the feature phone to the iPhone," Mr Bogard said of UP3.

However, UP3 cannot track heart rate during the day, as do rivals such as Apple Watch and Fitbit's Charge HR.

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