The global value of mobile and wearable contactless payments is expected to reach $95 billion annually by 2018, up from less than $35 billion last year.
This is according to Juniper Research, which notes the emergence of a range of connected wearables has piqued the interest of near-field communication stakeholders.
It expects devices such as watches and wristbands would be in the vanguard of these developments - also cautioning the sector would take several years to reach critical mass.
Research firm Tractica says digital payments using wearable devices such as smart watches, fitness trackers, and payment wristbands are an increasing area of focus for industry participants.
Also, consumer acceptance from early trials and deployments has encouraged some of the biggest names in technology and banking to continue their push to drive growth in this nascent market, it adds.
Tractica forecasts that wearable payment transaction volume will grow from $3.1 billion in 2015 to $501.1 billion worldwide by 2020, by which time wearable payments will represent approximately 20% of the total mobile proximity transaction volume and about 1% of total cashless transactions in retail.
On the other hand, Gartner says by 2018, 50% of consumers in mature markets will use smartphones or wearables for mobile payments.
However, mobile payments using NFC technology (Apple Pay, Samsung Pay and Android Pay) will be limited in the short to midterm due to a lack of partnerships between retailers and financial organisations, as well as consumers seeing little value in such payments, it adds.
"Any mobile payment wallets that are tied to the device will have limited adoption and only if the device has a huge installed base," said Annette Jump, research director at Gartner.
Instead, cloud-based solutions will have a better chance to succeed as they can reach a wider audience and can support many use cases beyond face-to-face or in-store options, says Jump.
According to the research, while nearly 9 million Apple Watches had been shipped by the end of 2015, these numbers were dwarfed by NFC-capable iPhones. As a result, Gartner said that wearables as a whole would not account for more than 2% of non-card contactless payments by value in 2018.
Furthermore, the research questioned the longer term prospects of wearable devices preloaded with credit, such as Barclaycard's bPay range, arguing that such devices represented a greater security risk than those linked to credit or debit cards and protected by a secure element.
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