Additional hardware won’t be required
Apple is reportedly about to launch a service that will allow businesses to use their iPhones as payment terminals without additional hardware, a move that could put pressure on market leader Block (formerly Square).
The new feature turns the iPhone itself into a payment terminal and will allow merchants to accept commissions by touching a credit card or another iPhone to the back of their device, Bloomberg reports, citing people familiar with the matter.
Shares of Block fell 3.6 percent to US$106.98 (A$150.96) in early trading on Thursday.
Apple has been working on the new feature since 2020, when it paid about $100 million for Canadian startup Mobeewave, which allows smartphones to accept payments with the touch of a credit card, Bloomberg reported.
The system will likely use the iPhone’s near-field communications chip that is currently used for Apple Pay, according to the report.
“This effectively allows Apple to sidestep the introduction of new hardware, since a significant number of customers are already carrying them (iPhones) in their pockets,” said Logan Purk, an analyst at Edward Jones.
However, Purk added that some business owners might be reluctant to switch unless Apple could offer a cheaper product and a simpler platform.
Square currently charges US$299 for its device and a fee of 2.6 percent plus 10 cents for every transaction.
If the iPhone maker keeps its new service exclusive to its apps or payment system, it would bypass Square’s services, which small businesses use extensively.
It could also affect other point-of-sale machine makers such as Verifone and Ingenico.
Apple declined to comment on the report.
The company has been beefing up its fintech services. It launched its own credit card with Goldman Sachs in 2019 and is reportedly working on a “buy, pay later” service.
The payment feature is expected to launch as part of iOS 15.4, which launched as a developer beta today. Bloomberg reports that the final launch of the OS will take place in early spring, around the time Apple is set to introduce the new iPhone SE and iPad Air with 5G.
