Payment rings will take us from the public transport network to the beach

What do you do with your money at the beach? Bury your wallet or bag under your towel and hope for the best? Take turns with a mate to guard each other's belongings? Or pack some coins and perhaps a small denomination note in a zip-loc bag or surf wallet?

For me, it's usually the zip-loc bag with a little cash. I've taken up ocean swimming, and when you're in the water for 45 minutes, swimming a kilometre or more, it's impractical to rely on either the honesty of strangers or the patience of friends and family. And if I'm staying close to shore, I'd rather play with my whole family in the surf than roster the fun.

I'd be a prime candidate for the new payment ring CBA subsidiary Bankwest has just launched, the first of its kind in Australia. It's embedded with the same technology as a contactless credit or debit card, so you can tap your ring to pay anywhere you can tap a card. Like a card, it doesn't need charging and it has the same level of security.

And yes, the ring is waterproof so you can wear it in the water, and individually sized so it won't fall off.

Bankwest's "Halo" ring links to a transaction account, though it uses Mastercard technology at the back end. A bank spokesman says this is so they could offer it to more people, since they have more account holders than credit card customers.

The Bankwest ring is a simple black or white ceramic band, with a cost of $39, but that's just the start of the trend. I was at a Mastercard briefing in Melbourne last week where executives were sporting payment rings from overseas from Britain that looked like high-end jewellery, with precious metals and sparkly stones. It's only a matter of time before that happens here.

In the mean time, most of the big banks have announced partnerships to embed contactless payment technology from either Mastercard or Visa in smartphone apps and smart watches such as from Apple, Samsung, FitBit and Garmin.

One advantage with these devices is the consumer can usually swap the payment card from within the app or even through the watch interface, whereas the rings are more difficult to change. If they don't come with a companion app, then the issuing bank can act as a gatekeeper. With the Bankwest Halo, for example, customers can change the nominated account in person at a branch, but only to another Bankwest transaction account.

On the other hand, the advantage of a ring is it's discreet and secure - as a fashion choice it's a different look to a gigantic watch and less tempting for thieves too. It's also less likely to fall off, making it a better bet for swimming or surfing - I have a FitBit Ionic and although it's waterproof and can track your laps in the pool, the band has come undone enough times that I'm reluctant to wear it in the ocean.

In time, jewellery manufacturers might offer payment rings direct to the public, giving consumers the option to keep the ring but change the payment method. Key fobs could also be an option.

The event that will really turbocharge wearable payments is when the transport cities in our major cities move to "open loop". At the moment, networks such as Opal in Sydney and Myki in Melbourne are "closed loop", which means that you need to tap on and off with a special card that's preloaded with credit and you can't use that card elsewhere.

The NSW government is looking at making the Opal system open loop, which would mean you could tap on and off with a contactless card or payment-enabled wearable device. Transport for NSW has been trialling it for the Manly Ferry since July last year and is expected to roll it out across the network as early as February.

Unfortunately for Melburnians, it could be a while before the Myki system is ready.

The advantage would be that you're never caught out without enough credit on your Opal card and it will also benefit visitors to Sydney, who'll be able to use their existing payment methods rather than an Opal card. The trial run by transport technology company Cubic was for Mastercard cards, but it's expected to be expanded to include all cards.

The further advantage of wearables embedded with payment technology is you don't even have to get a wallet or phone out of your pocket or bag - you could just tap your ring or watch to walk through the turnstiles. This is already the case in many countries around the world including London, Moscow and St Petersburg.

But all this convenience comes at a price. Payments sent via the Mastercard and Visa networks are more expensive for retailers, and banks are not letting merchants send contactless payments through cheaper eftpos network instead.

So I'd imagine you'd still find many retailers applying a surcharge or a minimum transaction value.

Consumers also need to be aware that numerous studies suggest people spend more money if they're paying with a card than cash. It seems paying with plastic reduces the "pain of paying" - the mental "ouch" moment when you actually hand over money. That's because you're separating purchase and payment, and also because if you mix purchases together you can treat it as one payment.

Mastercard's president of international, Ann Cairns, says open-loop payments for transport systems encourage consumers to spend.

"The general public gets used to using the things for the transit and then they continue to use the things at the local coffee shops around the station and the other shops around the station and it actually creates a virtuous circle," Cairns says. "Once you start using something every day, it changes the way you live."

That's great for retailers, banks and card companies, but less so for people trying to save money.

On the other hand, cash has a tendency to dissipate and I don't always recall what I've spent it on. Card payments make it easier for credit card holders to track spending and plug it into tools for budgeting or to claim expenses or tax deductions.

Caitlin Fitzsimmons is the Money editor. She flew to Melbourne and attended a technology showcase at the Australian Open as a guest of Mastercard. Caitlin writes regular columns on money, work and life and can be found on Facebook or Twitter.

The story Payment rings will take us from the public transport network to the beach first appeared on The Sydney Morning Herald.

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