Swatch in Smartwatch Payment Deal With Visa

ZURICH—Swatch Group AG Monday announced a partnership with payment services provider Visa Inc.—a significant step for the Swiss watchmaker as it attempts to break into the growing market for smartwatches.

Biel-based Swatch, the world's biggest watchmaker, said it had signed an agreement with Visa to provide cashless payment for its new Swatch Bellamy watch— its answer to Internet-enabled devices produced by Apple Inc. and others.

The pay by wrist function is planned for the watch, which will be launched in the U.S. Switzerland and Brazil from the start of 2016, Swatch said. The watch, which will sell for 90 to 100 Swiss francs, uses near field communication technology which allows devices to exchange data and enables cashless payment.

The Swatch Bellamy is Swatch's entry into the smartwatch space dominated by Apple, Samsung Electronics Co and others. The world-wide smartwatch sales are expected to grow from 7 million units in 2014 to 650 million by 2020, according to estimates by Smartwatch Group, a consultancy.

Many of these sales are expected to be at the expense of traditional watches, whose sales are forecast to fall by around $2 billion this year and $7 billion in 2016, Smartwatch Group has said.

Swatch, with its range of lower prices watches below the $1,000 price barrier is considered to be among the more vulnerable of Swiss watchmakers, with concerns weighing on the company's stock price that has lost nearly 18% this year.

At 11.30 GMT Swatch shares were trading 2% higher at 364.7 Swiss Francs.

Analysts welcomed Swatch's agreement with Visa, which follows a similar deal with state-run China UnionPay Co. for the Bellamy in the massive Chinese market.

The Visa deal "is an important milestone for Swatch, as it responds to forays by technology leaders in its category," said Luca Solca, an analyst at Exane BNP Paribas.

Write to John Revill at [e-mail]

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November 30, 2015 07:45 ET (12:45 GMT)

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