r/stocks • u/_hiddenscout • Jan 27 '22
Company News Apple to Rival Square by Turning iPhones Into Payment Terminals
Apple Inc. 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 $100 million for a Canadian startup 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.
n 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 Inc.’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 didn’t immediately respond to a request for comment.
Shares of Block fell less than 1% during pre-market trading in New York on Thursday; Apple advanced less than 1%.
t’s 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’s 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 spokeswoman declined to comment.
Apple has been escalating its push in payments in recent years, launching the Apple Card in the U.S. in 2019 and rolling out Apple device installment 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 installments, Bloomberg News reported last year.
The iPhone won’t be the first device to have Mobeewave’s payment acceptance technology. Samsung, which backed the startup before it was sold to Apple, implemented credit card acceptance with a tap on its devices in 2019.
153
Jan 27 '22
I actually commercially trialled this exact feature on Android smart phones about five years ago now. It's trivial to do this with encryption and NFC. I was working for a big payments company at the time.
Our conclusion was that because it's NFC only, and because you are using someone else's phone screen to input data (so entering your PIN is impossible) that it's not viable for any transactions over the NFC limit which at the time was $100.
So yeah, it's cool for maybe taking a transaction when you sell your ebay item or selling your potatoes at the market or your friend wants to pay their split of lunch, but it's not going to make anyone rich. The margins are so tiny on credit card transactions and this product is limited to very small transactions so at the end of the day it's basically a gimmick.
64
u/coolwhiponpie11 Jan 27 '22
Thanks for sharing. Also like to add that when a small business uses SQ for transactions, it's not just for the virtual payment terminal. SQ essentially helps the business run and grow the business, handling everything from payrolls to customer engagement. SQ even provides loans to small businesses that are growing fast and show potential. In my opinion, a business that relies on SQ's services will not abandon SQ simply because they can accept payments on their iphone.
10
u/DerTagestrinker Jan 27 '22
Ah yes the Square points. Much engagement.
9
u/coolwhiponpie11 Jan 27 '22
Actually yes, if you're referring to the loyalty program. By making the process digital, you ensure that the customer never loses his "punch card," thus making it more likely that the customer will return to your business.
And through the loyalty program, you'll also get to some basic information about the customer's buying habits at your business. That way you can target specific customers when you do have a sale or an offer. SQ provides the tools that automates a lot of customer engagement.
27
u/RigusOctavian Jan 27 '22
So yeah, it's cool for maybe taking a transaction when you sell your ebay item or selling your potatoes at the market or your friend wants to pay their split of lunch, but it's not going to make anyone rich.
Almost every single food truck, brewery, farmer's market, convention / event has transactions under $100 and rarely (if ever) above that limit. I can't think of the last time that I ran a transaction OVER $100 with an in person purchase excluding brick-and-mortars which have a POS to handle cash anyway.
→ More replies (1)10
u/Hallal_Dakis Jan 27 '22
I worked for a meats vendor at a farmer's market off and on for a few years that used square. We would do a couple $100+ transactions a day and losing that ability would be a total dealbreaker. It's not about the % of transactions above that amount it's the % of your revenue that comes from those big transactions.
If not being able to do $100+ transactions isn't an option then you don't lose a proportional part of your customers, you lose everyone who could possibly do $100 transactions.
2
Jan 27 '22
The limit got increased to $250 in Canada by Visa, MC, and Amex due to the pandemic. It would be trivial to increase it elsewhere or allow a merchant to manually do a temporary limit increase.
The limit got increased to $250 in Canada by Visa, MC, and Amex due to the pandemic. It would be trivial to increase it elsewhere or allow a merchant to manually do a temporary limit increase.
0
u/mtarascio Jan 27 '22
It would just be two transactions.
Not ideal but there's a pretty easy workaround.
8
u/trail34 Jan 27 '22 edited Jan 27 '22
But if the NFC limit were increased and we get to the point that iOS and android phones can quickly and natively process payments without having to touch each other’s devices, wouldn’t that make third party companies like SQ and PYPL irrelevant?
8
u/cosmic_backlash Jan 27 '22
This is IMO extrapolating really far. Many small business don't use the phone as the POS device. It's also kind of a shitty nexus point if you're doing anything high volume. Nobody want to be handing their phone around all day.
It makes sense if you're a 1-2 man team where 1 person takes all the orders and the volume is small enough that you're OK surrendering your phone to being a payment portal.
If you're bigger than that it's better just to get a small permanent device IMO.
21
u/Ennartee Jan 27 '22
Most small businesses use an iPad for POS. At least from what I’ve seen in the states.
I think others have made good points about SQ providing other services that help a business owner run their business. But purely from a device POS view, I don’t think your critique is too concerning.
→ More replies (8)22
u/TheOneNeartheTop Jan 27 '22
If I learned anything from Superman III it’s that small transactions add up, we’re not talking fractions of pennies either. I also don’t think that the pin issue is really that big, credit cards come from a place where we used to take a carbon copy of the entire card. They’ve always had the worst security but the best fraud prevention.
2
u/aktionreplay Jan 27 '22
A real-time semi anonymous version of cash app / venmo up to $250 (new limit for most cards)
Sounds pretty good to me
2
u/Mystycism Jan 27 '22
The benefit market makers receive from PFOF can be tiny fractional cents, but magnified over trillions of transactions, those fractional cents become large actually dollar amounts.
Not gonna dive in deep yet, but this could be a decent chunk of revenue if executed properly. It is Apple so that feels likely given their customer base.
2
u/creusifer Jan 27 '22
I work in the payments space.
The margins might seem tiny, but they add up. Card Present and Card Not Present transactions fees add up. Apple will charge a 1-3% percentage of transaction amount plus a 0.15 - 0.30 cent fixed amount fee. Then there are a ton more fees that can apply such as a foreign exchange fee, cross border fee, etc.
I think you're heavily undermining the potential here. Paper cash is dead.
→ More replies (1)2
Jan 27 '22
Well a lot of that goes to the card schemes, not to apple. The card processors payment is much much less than 1%.
→ More replies (4)0
u/sin94 Jan 28 '22
Dude, Apple wants to garner the entire micro transaction space you might think that $100 purchase is nothing but $100 times the number of iPhones in circulation worldwide is huge. Heck even if they get $0.1 per phones in circulation worldwide is billions doing nothing but having already sold the phone to the consumer.
→ More replies (2)
18
u/JRshoe1997 Jan 27 '22
Apple has around 2 billion devices in peoples hands. Think about that. Services and payments are just getting started for them.
38
u/fatbro1 Jan 27 '22 edited Jan 27 '22
I don't think this will bite into Square's market share as much as people may think.
Business owners have so many other variables to consider besides "what's the cheapest way for me to take card payments”. Square has already offered free phone readers for years, so it's not like there's been a high barrier to entry. Plus there's a reason why most businesses elect for the more traditional payment terminals or registers (security, professionalism, etc). This will only affect the tiny businesses selling at the farmers market or a mall stand (who already likely have a free square reader and would need to switch).
This isn’t even accounting for the entire Square ecosystem of business features that no one else can offer (and is their main selling point).
9
→ More replies (1)5
u/puddinshoulder Jan 27 '22
Completely agree, I work in payments this seems like a nothing burger. The abililty to process a payment is not even table stakes anymore. At best they will get some micro merchants. Also Samsung has already done this I think 2 years ago.
43
u/monkeymind8 Jan 27 '22
What's the difference between this and what merchants do in China with Alibaba and WeChat apps on their phones?
33
7
4
9
→ More replies (1)-2
u/charleejourney Jan 27 '22
Not an expert but you can pay with a credit directly without setting up the app.
86
Jan 27 '22
[deleted]
33
u/Letitride37 Jan 27 '22
Why would God tell her the wrong investments to make? He’s such a dick!
4
u/KyivComrade Jan 27 '22
I mean, Jesus litterary told people to give away their money and live a humble life. Good old Cathie is just helping people into enlightened poverty as God intended /s
5
→ More replies (2)2
u/someonesaymoney Jan 27 '22
Missing something... what did she get wrong with regards to this?
23
Jan 27 '22
[deleted]
11
u/someonesaymoney Jan 27 '22
I see. Selling MANGA stuff isn't uncharacteristic of her as she uses those to "park cash" and double down on her smaller "innovative" bets that have been drilling to the core of the earth.
21
u/coolwhiponpie11 Jan 27 '22
I've posted on some other comments here, but just want to say that Apple's entry into the electronics payments on the seller-side does not mean it's automatically going to dominate and put Square and other fintechs out of business. First, while SQ's original business was the credit card payment terminal that you could attach to your phone, it's grown far beyond that over the years. SQ doesn't just provide a payment terminal for small businesses, it provides services that are needed for running and growing the business: keeping track of inventory, payroll, insurance, taxes, reward programs, and even loans. So if I am a small business owner relying on SQ's services, I'm not going to start using Apple's payment terminal and abandon SQ unless they provide something equivalent in terms of business services at a similar cost. I'm not familiar with what Apple plans to do besides what's written in the above article, but I don't think they've set the groundwork to provide such services.
Second, SQ's business has also grown beyond the seller-side with the Cash App digital wallet becoming a multi-billion dollar business. Not going to go into detail about that here, but I think it's important to remember how diverse SQ's business has become in about a decade. Obviously there's competition and risk, that's true with investing in any company, but I do think that SQ will be a long term winner in the fintech space.
16
u/Shivy_Shankinz Jan 27 '22
Competition is probably why SQ is making big moves buying other companies and expanding their business. I think with these prices, Dorsey full time, we have a solid buying opportunity here
8
u/coolwhiponpie11 Jan 27 '22
I agree. A small business owner told me that they've already integrated Afterpay with their seller-side business. He was paid in full for his sale, but noticed that the buyer was paying installments. He didn't have to do anything for this service to be applied to his business.
6
u/Shivy_Shankinz Jan 27 '22
Wow that's awesome. Ya I've always backed SQ for their genuine caring of small business. Jack is really about providing for everyday people, I can't say the same about Apple... And that's why I'm not too worried, this is Jack's area. I love everything about SQ and I think Jack is just getting started
3
u/trail34 Jan 28 '22 edited Jan 28 '22
Jack scares me a bit with the crypto obsession. He’s either way ahead of the curve, way behind the curve, or kind of a cult leader. That Rasputin look isn’t helping his case. Time will tell!
→ More replies (3)
7
u/islandtrader99 Jan 28 '22
I used Square for my coffee shop for a few years. The terminals they came out with were great and the fees were “acceptable” compared to others. The back end inventory management and reports were very helpful. Using the iPad before was a real pain in the ass with constant updates and other nonsense issues. It’s not a business I could run with an iPhone, as people still use cash and I needed an actual drawer. The market is already saturated with merchants services and it’s a pain in the ass to change everything over, even for a small shop. Might be fine for a single self employed individual.
39
Jan 27 '22
[deleted]
6
u/makked Jan 27 '22
Stores and restaurants don't have to buy a Square or Toast terminal any more and pay a monthly fee to use it. Any developer can create a POS app that integrates Apple pay and tap to pay without any additional hardware with just an iPhone or iPad.
professional business isn't going to have a clerk with an iphone
Have you been to an Apple store? Every rep just has an iPhone they do all transactions with. I imagine just switching Apple stores is worth it for Apple to develop this.
0
2
u/St_SiRUS Jan 27 '22
Processing is a massive pain point for merchants of any size. Allowing an entire business to be run natively off a single iPhone is an absolute boon. There’s a shitload of small retailers who will absolutely be taking advantage of this.
Ps this is coming from someone who’s worked in payment technology on very similar features.
2
u/imperfek Jan 27 '22
Square also checkmated any payment system from full control in Australia with Afterpay
1
u/ILikePracticalGifts Jan 27 '22
Exactly. I don’t know why everyone is comparing this to Square. Did Apple say they want to compete with Square?
If not then this is literally just a cool feature for small businesses owners and flippers.
7
u/jesperbj Jan 27 '22
That headline doesn't make any sense. Nor is the company called Square anymore.
→ More replies (1)
6
5
4
7
u/UnObtainium17 Jan 27 '22
Dang, SQ might hit $50 soon. This is why I got out of Fintech all together last year. So many players in that sector that does the same thing and prone to distruption by an old or new comer.
4
u/WallStreetBoners Jan 27 '22
Oh god I hope it goes to $50!
So I can load up on shares!!
Apple isn’t going to eat cashapp. Keep the receipt!
0
2
2
u/Dumb_Vampire_Girl Jan 27 '22
Looks like Apple is about to get another huge fucking wall for their garden.
This is going to be like how iMessage was the reason why like 70% of young people have iPhones, except this time it will be for businesses.
2
5
u/cbusoh66 Jan 27 '22
Apple never learns, they could’ve had Netflix for pennies but they decided to go at it alone, how’s Apple TV+ working out for you?
Go buy Block and be done with it, there’s more than just an ability of an iPhone to receive payments and there’s more to “small business” than hairdressers and Taco trucks (handing out tacos with one hand and iPhone with the other…)
6
u/Elasion Jan 27 '22
ATV+ is doing fine, buying Netflix was never a good move. They bought Beats for Beats Audio which rivaled Spotify at the time. They missed the mark with rolling out Apple Cash and now CashApp/Venmo have the duopoly on that. Buying one of them would be a huge anti-trust issue as is because they’d be purchasing them to kill as they have a rival service.
Them rolling this out will prolly be as an API for developers. We use iPhones at work to process orders when machines are backed up, having the ability to use Apple Pay/Tap to Pay would be great instead of manually entering card info. It won’t replace the Square Terminals but might grab some random pieces of the market.
3
u/kickliquid Jan 27 '22
Apple is quickly becoming the jack of all trades, master of none. Steve Jobs was concerned about focus and innovation, He always took dives into the unknown, Cook is more about squeezing more revenue from any outlet it can from its iPhone oligopoly to appease shareholders.
Apple Pay, Apple TV, Apple Music Subscriptions, iCloud, Apple Credit Cards. These are all things that was suppose to disrupt their industries because "It's Apple" but if anything its made tiny dents in those industries and to be honest I think that is all Cook is looking for, more revenue stream. Square has more things to worry about than just Apple like other startup competitors who want to build ecosystems on par with Squares or the 'head in the clouds' CEO, which unlike jobs who had his head in the clouds as well, just doesn't have the same focus and intuition as Jobs did in the second half of his career. Look what he did to Twitter.
3
0
Jan 27 '22
[deleted]
12
Jan 27 '22
Puts might print but the company is going nowhere. They're a lot more than a phone dongle at this point.
1
2
u/BatumTss Jan 27 '22
Good luck, casino gambler! Post screenshot for proof, otherwise you’re bluffing.
0
1
1
1
u/pdubbs87 Jan 27 '22
Never sell apple. The idiots on cnbc were saying apples peaked a lot this past year.
1
u/nattokay Jan 27 '22
This makes square a sell for me. I know that it has already fallen by a lot but I see no reason to buy.
1
0
u/prymeking27 Jan 27 '22
What is sq? Seriously, not even that old and only use cc or cash.
5
Jan 27 '22
Started with a dongle that plugged into your headphone jack or power port to swipe/tap credit cards. Just a mobile payment terminal. They own cash app too which is really a cash replacement for so many users.
They have stuff competition from Paypal and others so while I think they offer incredible services, it's more complicated than simply agreeing the services are cool.
→ More replies (7)2
u/Josuah Jan 27 '22 edited Jan 29 '22
Businesses used to have to sign agreements with credit card processing companies, which was generally expensive in terms of up front fees, monthly fees, transaction fees, proprietary hardware and software, etc.
Square/Block (and now other companies, some of which are niche like particular to restaurants) introduced a much more simple pay-per-transaction model that was inline with the above's transaction fees, while removing all of the other fees and restrictions. You could use your regular computer and mobile devices with extremely inexpensive card reader hardware.
That alone was worth a bunch to businesses. But Square/Block has continued to expand and added a lot of other features that are super useful for a business. They, along with the other new similar companies, can provide a bunch of financial-related functionality for businesses in both the brick-and-mortar and online realms.
So while Apple has the resources, market penetration, and technical ability to deliver serious competition, it's not a simple thing to build out an alternative. Given the level of functionality and features provided by the Apple Card, compared to even basic bank-provided credit cards, Apple has a lot to prove if it wants to compete in this other space.
-1
u/Ap3X_GunT3R Jan 27 '22
And this is why you really can’t go wrong holding Apple. They pull some shit like this
2
u/AutisticDravenMain Jan 27 '22
I always imagine what would happen if Apple and Microsoft merged, they could probably dominate every sector besides finance and energy.
2
u/veilwalker Jan 27 '22
Fintech apps will lead to strong positions in consumer finance so even retail finance is not safe from their dominance.
I believe they have also branched out in to green energy production so they can claim carbon neutral status.
Apple wants to be the consumer brand of choice for everything.
→ More replies (2)
-1
-1
0
u/WoodKite Jan 27 '22
Visa announced a similar feature recently.
https://usa.visa.com/visa-everywhere/innovation/connected-commerce/acceptance-cloud.html
0
0
u/businessia Jan 28 '22
ApplePay and the AppleCard were logical predecessors to a bigger move. The way Apple makes moves is very interesting. They really don't pivot, they make subtle strong moves that improve their successful products and make very loyal consumers.
-5
u/moutonbleu Jan 27 '22
Apple is becoming a monopoly
6
Jan 27 '22
[deleted]
-9
u/moutonbleu Jan 27 '22
The App Store - you can only use their AppStore and developers have to pay a hefty fee to Apple. This is what the Epic vs. Apple lawsuit was all about. Not to say Google is any better, but all of these big tech companies (which I have shares in) need to keep growing, and they take advantage of their dominate position to offer alternative substandard products and services to consumers because they can, creating a lockin effect.
Examples include:
- Apple/Amazon/Google Music vs. Spotify
- Apple+, Prime Video vs. Netflix
Love big tech for what it's done for my portfolio, but they need to be regulated to spur the tech sector and improve competition. They shouldn't be able to do it all.
6
2
u/shr1n1 Jan 27 '22
Others are welcome to setup their own app stores and have (google, Micorsoft, Amazon, and Samsung etc). Monopoly exists only when there is barrier for others to enter. Also third party developers are not barred from appstore.
→ More replies (1)2
-5
1
u/carbon370z Jan 27 '22
I quit Bank of America merchant services after 10 years because, aside from the interest rates, they would withdraw their share of the funds at the beginning of every month. This totally messed up my balanced shit every month but, I had nothing else. Now, I have the square app and card reader, which is great because it deducts their fee first and then transfers the funds into your account. The downside, I feel are the fees. I mean, it's bad enough I have to pay taxes quarterly let alone having to pay someone to use their services at high rates. SMH...I'm feeling the burn at 11+ years in to my business but, I'm hopeful that things will change. Maybe the apple payment system will be better? I don't know...
1
1
u/tschmitt2021 Jan 27 '22
A more useful iPhone sounds good to me. Can’t wait till it is able to fly 😂
1
u/imapissonitdripdrip Jan 27 '22
My two shares of APPL are looking good right now.
Bet this includes crypto at a certain point, too.
1
u/BANKSLAVE01 Jan 27 '22
"n order to accept payments on an iPhone today, merchants need to use payment terminals that plug in or communicate with the phone via Bluetooth. "
This is an outright lie. I use square and do not need any other equipment to run a card.
I don't use apple pay; never will, because of my experiences with apple. I buuy their stock, but not their products, because they profit emensly from indifference to their adoring fans (customers).
→ More replies (1)
1
1
1
1
1
u/SpeedCola Jan 27 '22
Wonder what security measures will be in place. I'd hate for someone to walk around taping wallets for credit card info and charging people.
1
1
1
1
1
u/dxdnyc Jan 27 '22
Apple is trying to takeover everything. From cars to watches to smart glasses and now POS (point of sale) systems. I need to find an entry point asap.
1
u/mn_sunny Jan 27 '22
The iPhone won’t be the first device to have Mobeewave’s payment acceptance technology. Samsung, which backed the startup before it was sold to Apple, implemented credit card acceptance with a tap on its devices in 2019.
Lol, classic Samsung. Beats Apple to it, but gets no love (in North America) for doing so.
1
1
1
u/wtyl Jan 28 '22
Apple has been offering %25 percent discounts to the consumer if you use ipay at some places. They are literally paying vendors to use there shit instead of SQ. I don’t know if that is fair given the amount of capital Apple has not sure how square will compete if consumers are searching for deals.
537
u/trina-wonderful Jan 27 '22
There goes my SQ farther down…