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* Watches, rubber wristbands lead rise of wearables
* Apple Pay launch set to help growth in contactless
* 75 mln wearables expected to be shipped this year -analyst
* 29 mln wearables shipped in 2014
* More than 340 mln wearable payment units seen used by 2018
By Steve Slater
LONDON, July 16 (Reuters) - New payment technologies such asApple Pay and FC Barcelona wristbands carrying a digital walletwill increasingly mean bank customers ditch cards and cash forwearable technology, experts predict.
Watches, wristbands, jewellery, key fobs and other so-calledwearables, as well as mobile phones, are expected to follow asurge in tap-and-go payments in countries where card issuers,banks, retailers and consumers have embraced the technology.
Some 75 million wearable products are expected to be shippedthis year by people looking at alternatives to tapping a card ona merchant's terminal, almost treble the 29 million shipped lastyear, according to technology research firm CCS Insight.
"People want to tell their payment provider how they want topay and not be told in the traditional way of 'here's yourplastic, now get on with it'," said Howard Berg, senior vicepresident at Gemalto.
Gemalto is a digital security firm best known for making SIMcards which issued its first payment wristband last year andexpects to distribute hundreds of thousands in Britain alonethis year.
CCS Insight predicts the spike in wearables this year willbe followed by shipments more than doubling again by 2018 toleave more than 340 million wearable devices in use. Most willbe smartwatches and wristbands, though payments will also bemade via wearable cameras, jewellery, tokens and eyewear.
"Payments is a really key element in the direction oftechnology at the moment. There are lots of companies trying tocrack this nut, and the key is it needs to be secure and easy,"said Ben Wood, analyst at CCS.
APPLE EFFECT
So far, much of the shake-up in payments has been in howtransactions are processed, far out of the sight of customers.
But the rollout of Apple Pay in the United Statesin October and in Britain this week has thrust the way consumerspay into the spotlight.
The "Apple effect" can often help rivals too, and someexpect the launch to mark a tipping point for contactlesspayments.
Banks could offer a range of options.
BPay, launched last month by Barclays' credit carddivision, is offering users options to put a payment device on awristband, a key fob or a sticker that can attach to a devicesuch as mobile phone, though it is charging for each one.
Growth in wearables is likely to be led by countries wherecontactless payments have already taken off, given they use thesame terminals. Some European and Asian countries look set tolead.
MasterCard said contactless card growth is running at70 percent a year, and Australia is leading the way with 69percent of transactions there now contactless.
Visa Europe said its cardholders spent 1.6 billion euros ($1.7 billion) using contactless payments in March, a threefoldincrease on a year earlier led by users in Britain, CzechRepublic, France, Poland and Spain.
FRICTIONLESS
One in 10 contactless payments in Britain is on London'stransport system, where 625,000 tap-and-go payments are madedaily, not counting prepaid Oyster cards.
Wearables will range from high-end watches costing more than$1,000 to throwaway wristbands made for less than $3.
Wristbands could increasingly displace cards on buses and atunderground stations where people may prefer not to take out awallet or phone. They are also taking off as digital wallets atfestivals, holiday resorts and sports events. Disney,for example, launched MagicBands for its parks in late 2013.
"It's a very socially accepted place to wear something andtherefore it's a very good place to put a payment mechanism,it's almost a frictionless payment," CCS's Wood said.
Because most contactless devices or cards can be used byanyone if they are lost or stolen, many countries cap the amountper transaction.
While consumers may benefit from ease of use, banks,merchants and venues also stand to benefit as there is evidencemore is typically spent with wristbands than cards, while theycould also get access to valuable data on customer behaviour.
Banks are also on the lookout for brand benefits fromteaming up with popular teams for their wearables.
Spain's Caixabank, which distributed 30,000wristbands last year, is offering ones with FC Barcelonabranding this year - though the Barcelona-based bank is yet tooffer them in the colours of arch-rivals Real Madrid.($1 = 0.6401 pounds)($1 = 0.9196 euros) (Editing by David Clarke)
