Here's One Way Apple's Smartwatch Could Be Better Than Anything Else

Apple is expected to release a smartwatch sometime this fall or early next year.

There's already speculation that the so-called iWatch will be a dud - that it won't live up to the iPhone's massive success.

But that fate isn't set in stone, and it's impossible to judge a device that doesn't exist yet just because other products in the category haven't been smash hits. In fact, Apple could do a number of things to make the iWatch a hit with consumers.

One appealing option for Apple would be to make the iWatch a payment platform that would replace some or all of the cards you carry every day, according to a recent Techpinions post by Jan Dawson, Chief Analyst at Jackdaw Research.

First, Dawson sets the scene, illustrating how few consumers in the U.S. have used mobile payments with the pie chart:

Dawson says there's a "chicken and egg" problem with mobile payments.

Consumers don't want to adopt the technology because it's not used in enough retailers. Retailers don't want to pay for the infrastructure because not enough consumers are using the technology yet.

This cycle could continue indefinitely.

"Were Apple to introduce such a device or devices though, it would still suffer - at least at first - from the same problem of a lack of terminals which could accept payments," Dawson says.

Because of its size and tremendous pile of cash, Apple could break into payments in a way few others could: by directly subsidizing retailer payment terminals.

As you can see, payment terminal adoption is pretty sluggish in developed markets:

A collaboration between Apple and major retailers would broaden the appeal of mobile payments - and the iWatch itself. Apple would completely disrupt the smartwatch market, something no other entry like Google's Android Wear watches has been able to do yet.

Apple has been rumored to be getting into payments for a while.

It recently held discussions with Visa - which has over 2 billion cardholders - according to a report by The Information. That report said Apple might use WiFi or Bluetooth rather than Near-Field Communication (NFC) for such a platform.

The Information's report centers on the iPhone as a payment platform, but applying some of those ideas to the iWatch could make things interesting.