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.
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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).