NEW YORK (BLOOMBERG, REUTERS) - Apple is planning a new service that will let small businesses accept payments directly on their iPhones without any extra hardware, according to people with knowledge of the matter.
The company has been working on the new feature since around 2020, when it paid about US$100 million (S$135 million) for a Canadian start-up called Mobeewave that developed technology for smartphones to accept payments with the tap of a credit card.
The system will likely use the iPhone's near field communications, or NFC, chip that is currently used for Apple Pay.
In order to accept payments on an iPhone today, merchants need to use payment terminals that plug in or communicate with the phone via Bluetooth. The upcoming feature will instead turn the iPhone into a payment terminal, letting users such as food trucks and hair stylists accept payments with the tap of a credit card or another iPhone onto the back of their device.
The move could impact payments providers that rely on Apple's iPhones to facilitate sales, such as Block's Square, which dominates the market.
If Apple lets any app use the new technology, then Square can continue accepting payments via Apple devices without needing to worry about providing its own hardware. If Apple requires merchants to use Apple Pay or its own payment processing system, that could compete directly with Square.
A Block representative did not immediately respond to a request for comment.
"This effectively allows Apple to bypass rolling out new hardware because a significant amount of customers already carry it (iPhones) in their pocket," Edward Jones analyst Logan Purk said.
Mr Purk, however, added that unless Apple can offer a cheaper product and an easier platform, some business owners may be reluctant to switch.
Square currently charges US$299 for its device and a fee of 2.6 per cent plus 10 US cents for every transaction.
Shares of Block fell 3.4 per cent as the market opened in New York on Thursday (Jan 27); Apple advanced 2.1 per cent.
It is unclear whether the payment acceptance option will be branded as part of Apple Pay, though the team working on the feature has been working within Apple's payments division since being brought over from Mobeewave, the people said. It is also not known if Apple intends to partner with an existing payment network for the feature or launch it alone.
Apple may begin rolling out the feature via a software update in the coming months, the people said. The company is expected to release the first beta version of iOS 15.4 in the near future, which is likely to see a final release for consumers as early as the spring. An Apple spokesman declined to comment.
That would put the debut near a few other announcements; Apple plans to launch an iPhone SE and iPad Air with 5G as early as March or April, in addition to a new Mac running an Apple custom processor, Bloomberg News has reported.
Apple has been escalating its push in payments in recent years, launching the Apple Card in the United States in 2019 and rolling out Apple device instalment plans on the credit card later that year. It also offers the Apple Cash card for digital peer-to-peer payments and is working on a service for Apple Pay that would let people buy things and pay them off later in instalments, Bloomberg News reported last year.
The iPhone will not be the first device to have Mobeewave's payment acceptance technology. Samsung, which backed the start-up before it was sold to Apple, implemented credit card acceptance with a tap on its devices in 2019.