Swedish Watchmaker Brings NFC Payments to Its Smart Watches

Kronaby's Hybrid Smartwatch incorporates technologies from Fidesmo and STMicroelectronics that enable contactless payments, with access control and other functions slated for further use cases.
Published: November 12, 2018

Technology companies have been the prominent suppliers of smart watches in recent years, but one Swedish maker of connected watches, Kronaby, has turned that model on its head by selling a classic-looking wristwatch that incorporates the technology more commonly found in devices sold by companies like Apple or Samsung. Kronaby will soon offer Near Field Communication (NFC) functionality in its products, in order to enable payments, access control, transportation and promotional content, all with the tap of a wrist. Initially, the company is enabling payments via a user’s MasterCard account.

The solution is provided by contactless technology firm Fidesmo and semiconductor company STMicroelectronics, which have teamed up to offer an NFC payment system-on-chip (SoC) for watches, jewelry and other wearables. The solution leverages STMicroelectronics’ newly released STPay-Boost IC and Fidesmo’s over-the-air (OTA) technology to personalize the NFC functionality on the wearable device, says Mattias Eld, Fidesmo’s CEO.

Kronaby’s Jonas Morän

Since 2017, Kronaby has offered its Hybrid Smartwatch with a Bluetooth connection to smartphones running the Kronaby app. It comes with a classical look with dial plate and hands, the company reports, but also can receive texts, e-mails or phone calls, control music on a phone or speaker, and automatically adjust to the proper time zone when a wearer is travelling. Recently, the company began looking into technology that could enable the watch to do more.

“First of all, the placement of a watch on your wrist makes it ideal for contactless interactions,” says Jonas Morän, Kronaby’s product manager. “Hybrid Smartwatches are all about allowing you to be connected to the digital world without being distracted by it. We will be launching several products that include the Fidesmo technology, starting in 2019.”

Fidesmo offers a software platform and ecosystem that make it possible to distribute services to a device wirelessly. The firm offers both semi-active and passive solutions. It builds passive NFC chips into ID cards or badges, or can install a chip into a battery-powered device for a semi-active solution. The use case for Kronaby would require a system in which an NFC chip could be embedded in a watch’s metal frame and still transmit and receive signals. That means the SoC would use the watch’s battery, while also leveraging STMicroelectronics’ boost functionality.

The booster employs active load modulation (ALM), an analog process that reshapes the NFC signal when it is being received, while amplifying its response. The boost feature ensures that the tag can respond to an NFC signal, even in a metal environment. In this case, however, the antenna is built underneath the non-metallic watch face, according to Lionel Ravel, STMicroelectronics’ product marketing engineer.

Kronaby’s Jonas Morän

Wearable device chips need to be very small to accommodate form factors, such as wristwatch frames and jewelry, Ravel explains, and the boost function ensures that the chip does not require a very large antenna. “That’s where the booster allows a very elegant solution,” he states. Additionally, the STPay-Boost IC combines a secure element with an NFC chip (traditionally, the secure element is separate from the NFC chip), based on a Java operating system. The chip has a large memory capacity, Ravel adds—up to 135 kilobytes of nonvolatile memory for user applets and personalization data, in addition to pre-loaded payment applets.

When Fidesmo and Kronaby first began discussing a payment solution for the Hybrid Smartwatch, the two companies opted to use NFC in integration with a financial services firm. To that end, Fidesmo began working with MasterCard. The system requires that a user first download the Kronaby app. He or she then opens the app, which utilizes Fidesmo’s software-based data. “For us,” Morän says, “it’s key to integrate the entire user experience. That’s why we’ve chosen to do all product and software development in-house.”

A user can set up credentials in the watch by inputting his or her MasterCard account information and a password into a mobile phone. That data is then tokenized and sent to the watch via a Bluetooth connection. An individual can input the information he or she considers most important. “In order to set up the watch and make it yours,” Morän states, “it’s of the essence to have an intuitive, nice-looking app that consumers understand, since we sell Hybrid Smartwatches for everyone.”

Once the MasterCard account is linked to the watch, the user can begin making payments for store purchases with his or her watch. There are a growing number of NFC-enabled payment systems deployed at European stores that could read the watch’s chip, Eld reports. In fact, there is a mandate in Europe that all point-of-sale devices accept NFC payments by January 2020. “We are already at about 50 percent in Sweden,” he says.

STMicroelectronics’ Lionel Ravel

The system begins with a single financial service provider, Eld notes, though he adds, “We’re not just about MasterCard—we want to be a hub to connect to other services,” whether users make payments from a variety of accounts, access restricted areas or redeem coupons. “I think that’s something the market wants as well.”

The STPay-Boost chips are now being used in a sample version. According to the company, the ICs are expected to be available in full production this month at a price of $3.50 each, in orders of 1,000 pieces or more.

Morän cites three key features of the new watch: “First, it has the quality, specification and looks of a traditional watch, combined with the freedom of not having to charge it,” he says, since it uses a coin cell battery. Second, NFC technology allows Kronaby to add services over time “and, in that way, make it even more useful to our customers.” The third feature, Morän says, is the convenience of having a payment system on a wrist, as opposed to it being in the form factor of a card or mobile phone. “There’s no need to dig in your pockets or purse,” he states. “Just reach out and tap and pay.”

The wearable market will continue to grow as technology such as the STPay-Boost IC becomes available, Ravel predicts. “People are seeing mobility,” he says. “They want to carry their credentials with them,” and not have to take a wallet or smartphone out of their pocket. “I’m pretty confident the market will continue to expand from the card side to the wearable side.”

Fidesmo’s Mattias Eld

Additionally, Fidesmo offers integration into access-control systems and other solutions that leverage NFC transactions. In January 2018, the firm partnered with Bravida, an access-control systems provider, to build a solution by which wearables and Fidesmo NFC-enabled ID cards would provide access to facilities for individuals with the proper credentials. The system consists of Fidesmo’s open software platform and Bravida’s access-control services. Companies using the technology include employers that need the system to manage workers’ access to buildings or campuses.

Germany’s Verband Deutscher Verkehrsunternehmen (VDV), a cooperative agency for the nation’s public-transit authorities—and the organization behind the contactless ticketing standard used in that country—serves Frankfurt, Hamburg, Berlin and nine other regions. The agency is currently working with Fidesmo, using their NFC-enabled devices and cards to provide passengers with access to its modes of transit. The system is an integration between VDV’s own software platform and Fidesmo’s, storing keys and other data on the devices that connect with Fidesmo tags to make the latter an integrated part of the public-transit ticketing system.