Snippings

I am a long time proponent of Digital Public Infrastructure (DPI). A strong DPI has three foundational components: digital identity, electronic payments and data exchange. Implemented correctly, these are the basis of a safer, more secure and growing economy and I think that implementation should be a priority for any government that takes net welfare seriously.

This is why I was keen to read the The World Bank’s new report “Digital Wallets: A New Paradigm – Convergence of User-Centric Digital Identity, Data Sharing and Payments”, published in May. The report (written by Christopher Tullis, Adam Cooper and David Black) talks very realistically about the benefits of a wallet-centric approach but also about the attendant risks and how to deal with them. In particular, they note how the integration of AI agents into wallets could deliver major benefits by automating routine decisions. AI-powered assistants could also help users understand how their data is being used, for example, by simplifying complex consent forms by translating legal jargon into intuitive language.

Wallets used by AIs are what I would call smart wallets and they may be even more important than payment devices, money managers and digital drivers licence containers. As Kaliya Young and Lucy Yang put it, smart wallets are going to play an important role in an organization’s relationships and interactions with their customers. In common with many other people (eg, Jamie Smith) I would push even further and say that this other channel will become key to business and Jamie’s view of the digital wallet as a safe channel connecting the brand and customers seems a good way to think things.

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This document provides a conceptual and architectural framework for understanding digital wallets, verifiable credentials, and their role in transforming digital identity, data sharing, electronic signing, and digital payments. It is intended primarily for government decision-makers and practitioners seeking to design, regulate, or oversee wallet ecosystems, although many concepts are equally relevant for private-sector participants of these ecosystems – including financial institutions, trust service providers, and technology platforms. This paper focuses on how wallets work, what is new about them, and how they change digital identity, data sharing, electronic signatures, and payments. It also highlights the risks and challenges that implementers must address as these ecosystems grow.

From: Open Knowledge Repository.

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Financial literacy in Britain is at very low levels. In a recent survey, more than half of British adults questioned about Investment Savings Accounts (ISAs) were unable to explain the difference between a cash ISA and a stocks and shares ISA, which seems prettuy fundamental to me. For those aged 25-34 it was seven in 10. I can understand those surveyed when it comes to seemingly endless policy and tax changes that make it near imposisble for normal people to understand what exactly the rules on investing and saving are, but to be honest I cannot see how any kind of financial literacy programme might mitigate such in any imagineable timescale. Given that the survery also showed that a quarter of British adults don’t understand what an interest rate is and that three quarters of them don’t know what an index fund is, the only reaosnable strategy I can imagine is to stop them from managing their money compeltely and get AIs to do it for them instead.

If you think things might improve and that I am being unneccarily dismissive of Brit capabilities when it comes to money, then I must draw your attention to the fact that a third of  Gen Z consumers get their financial advice from TikTok and only a quarter seek advice from actual financial advisors. And how is that working out for them? Not well, it seems. And not only in the UK. Last year investors lost billions of dollars betting (sorry, “investing”) on a handful of US-listed Chinese stocks that plunged in value shortly after being heavily promoted on social media.

I remember when my good friend Ron Shevlin wrote in Forbes that whatever “financial literacy” might be, it seems to do little to improve the financial health of Americans. Same back home in the U.K. It’s time to give up on education and start investing in infrastructure. Instead of financial literacy, let’s get responsible AI into the loop. The idea that I might make a better choice of savings account than event the most rudimentary AI seems fundamentalyl flawed. This doesn’t just apply to savings by the way. Frankly if I never have to talk to a car insurance company ever again it will be too soon:  when it comes to cr, house, health and life insurance, I would cheerfully pay £9.99 per month for a bot to care of them for me in perpetuity.

The big U.S. banks are launching a tokenised deposit network to connect traditional payment rails with digital asset infrastructure. It will be operated by The Clearing House (TCH), which is of course owned by those big banks. The digital asset infrastructure will work through a partnership with an as-yet-undefined vendor with the goal of serving large multinational corporation with use cases including programmable treasury operations, real-time liquidity management and cross-border payments. Banks tend to favor tokenized deposits over stablecoins because they are simply traditional bank deposits represented as digital tokens on the blockchain ,which means that they can provide digital asset payment services within the existing regulatory framework and keep deposits within the banking system.

Banks elsewhere are getting inolved in similar schemes, 

According to the Wall Street Journal, the head of global payments solutions at Bank of America (Mark Monaco) said that customers aren’t necessarily “beating down the door” for tokenized deposits. That may simply be because tokenised deposits are new and bank customers don’t really understand them, or it could be because the bank customers would prefer to see exisiting instant payment networks interconnected.

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Cuba will suspend Visa and Mastercard transactions from tomorrow (6 June) after a foreign bank that processed those payments decided to end its relationship with Fincimex, according to the country’s central bank.

From: Cuba to stop Visa and Mastercard payments – GlobalData.

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The Centre for Economic Policy Research (CEPR) has just published the eighth report in its “The Future of Banking” series, part of the Banking Initiative at IESE Business School, which examines the challenges digital technology poses to the framework governing money creation. The authors set out a fundamental challege, which I will paraphase as follows:

Central banks issue public money, while commercial banks create most of the money used in day-to-day transactions by issuing deposits. This arrangement is sustained by a set of public institutions that allow private bank liabilities to circulate as money at par with public liabilities. This is seen as a natural state of affairs, even though it is, in fact, a historically contingent institutional settlement. New technology means that we must ask whether this settlement remains desirable, especially as cash recedes and new digital liabilities proliferate.

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Barcelona 8: Digital Money
Stephen Cecchetti Dirk Niepelt Hélène Rey Xavier Vives

From: Publications | CEPR.

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“The point of departure is the contemporary two-tier monetary system. In modern
economies, central banks issue public money, while commercial banks create most
of the money used in day-to-day transactions by issuing deposits tied to lending. This
arrangement is sustained by a set of public institutions – convertibility into central bank
money, prudential regulation, deposit insurance, and lender-of-last-resort support – that
allow private bank liabilities to circulate as money at par with public liabilities. This
structure is often treated as natural, even though it is, in fact, a historically contingent
institutional settlement.”

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First: digital ID credentials are going into Google Wallet at scale. Aadhaar in India, enabling over a billion citizens to verify identity across services. Mobile driver’s licenses in the US. My Number Card in Japan. Google-issued ID passes derived from passport data in Brazil and the UK. And a plan to expand to many more countries by end of year.

But the most interesting signal was what Linarducci said next: Google Wallet is expanding beyond government-issued IDs to support privately issued credentials from banks and other institutions. Sparkasse is the first. The major German savings bank, serving 50 million customers, is launching age verification directly inside Google Wallet.

Users can prove they are over 18 online using a bank-issued credential, cryptographically secured, with no name, address, or date of birth revealed.

Sparkasse is the first. It will not be the last.

From: Post | LinkedIn.

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The wand is the first edition of a new form factor, Cash APP tags – NFC-enabled, physical payment accessories that let customers pay without having to reach for their phone or card.

From: Cash App launches contactless wand.

The Cash App people probably thought this was a new idea, but I have longer memory than they do.

A couple of decades ago, Transport for London (TfL) were complaining about the “craze” for get the chip and antenna out of an Oyster card and then attaching it to various objects. I can remember many such examples at that time, from the guy who put his into a magic wand to the people who gued the card and antenna to a £5 note so it looked as if they were tapping banknotes to ride on the bus. A ticket inspector was reported as saying “It’s the latest thing. We’re seeing more and more of it”.

(It was quite easy to do. If you leave the card overnight in a bowl of nail polish remover, the plastic will dissolve and leave behind the chip and antenna.)

Of course, this is the sort of thing that Digiseq have been doing for years (but it in a more sophisticated way, because they personalise the chip remotely through their iPhone/Android apps). My wife uses her key ring as a John Lewis Mastercard, whereas I prefer play around more. Here’s an example of me demonstrating pay-by-bank with a bank made from Lego.

It’s actually an interesting growth sector. Wearable payments were an $80 billion market last and are projected to reach close to $200 billion by 2030 (a CAGR of more than 18%). The main payments wearables right now are smartwatches, fitness trackers, payment wristbands, rings (the fastest growing sector) an dothers. Analysts seem to think the growth is becaud of an increasing consumer preference for cashless transactions, the expansion of contactless payment infrastructure and improved payment network acceptance amongst other factors.

 

Got it, let’s stay strictly with passive NFC devices (no on‑device logic, just token+antenna) like rings, bands, tags.

## Overall wearable payments vs passive devices

– Broad wearable payment forecasts (all devices, active and passive) expect the market to grow from about 47 billion USD in 2023 to roughly 393 billion USD by 2033, at around 23–24% CAGR. [alliedmarketresearch](https://www.alliedmarketresearch.com/press-release/wearable-payment-market.html)
– Those totals are dominated by smartwatches and “smart” bands; passive form factors (simple NFC wristbands, cards, rings without displays/OS) are explicitly described as a niche within that. [abiresearch](https://www.abiresearch.com/news-resources/chart-data/passive-payment-wearable-revenue-form-factor)

So the headline numbers you see in big wearables reports overstate things if you care only about passive objects.

## Passive payment wearables specifically

ABI and similar analysts carve out **passive payment wearables** (no battery/OS, typically closed‑loop or scheme‑tokenised):

– One ABI dataset notes that passive payment wearables are still a *niche* given the dominance of cards and phone wallets, and focuses on wrist‑ and ring‑worn devices. [abiresearch](https://www.abiresearch.com/news-resources/chart-data/passive-payment-wearable-revenue-form-factor)
– For **closed‑loop passive payment wearables** (events, transit, hospitality, stadiums, resort wristbands, cruise bands, etc.), shipments are forecast to remain under 1 million devices in 2025 and to reach about **1.37 million units by 2030**. [abiresearch](https://www.abiresearch.com/news-resources/chart-data/closed-loop-passive-payment-wearable-device-shipments-outlook)
– In that closed‑loop slice, wristbands dominate due to fit/comfort and event use cases; rings are constrained by sizing/standardisation and the need for more durable materials. [abiresearch](https://www.abiresearch.com/news-resources/chart-data/closed-loop-passive-payment-wearable-device-shipments-outlook)

That’s a tiny volume compared with card issuance, but in closed‑loop ecosystems these bands and rings capture a very high share of transactions per user over the device life.

## Payment rings as a market

When analysts look at **contactless payment rings**, they usually mix passive and semi‑active devices, but the economics are still heavily “passive‑style” (simple NFC + token):

– One “contactless payment ring” forecast values the ring segment at about 55 billion USD in 2026, growing to about 192 billion USD by 2033, with a ~19–20% CAGR, framing them as part of the broader contactless wearable category. [coherentmarketinsights](https://www.coherentmarketinsights.com/industry-reports/contactless-payment-ring-market)
– Smart‑ring market reports (all use cases) put the overall ring category in the low‑hundreds‑of‑millions USD mid‑2020s, heading into the low‑billions by early‑2030s (CAGRs around 20–25%), and repeatedly call out payments as one of the fastest‑growing applications. [grandviewresearch](https://www.grandviewresearch.com/industry-analysis/smart-rings-market-report)

Most of these ring numbers assume the primary function is exactly what you describe: passive NFC “tap to pay”, sometimes combined with fitness or access control, but not running rich agents on the device.

## How to read these forecasts if you care about passive rings

Putting it together:

– Passive rings and wristbands are forecast to stay **niche in volume terms** (single‑digit millions of units per year globally for closed‑loop only), but
– They sit inside a **fast‑growing revenue space** where overall wearable payments are on a 20–30% CAGR trajectory, and
– Within that, **rings are consistently tagged as the fastest‑growing form‑factor segment**, off a small base, because of “always‑on” convenience and the ability to integrate with schemes’ existing tokenisation rails. [grandviewresearch](https://www.grandviewresearch.com/industry-analysis/smart-rings-market-report)

For the kind of work you do: these numbers imply more of a **high‑margin niche accessory** story than a mass‑replacement of cards/phones, at least through 2030.

What would you like to dig into next: scheme/business‑model assumptions behind those ring revenues, or technical constraints (tokenisation, lifecycle, KYC) that might cap passive ring adoption?

I was genuinely flattered to be listed in the top 10 thought leaders in European financial services. To be highlighted in such a list is of course a matter for pride, but in this case I was particularly pleased to make the cut given the criteria. There were: Making a substantive contribution to the field of financial services leadership; Active engagement through published content or public advocacy.; and Including  voices the reader may not yet have encountered alongside more familiar names.

As you can imagine, I it feels good to see these different aspects of my work recognised.