Mark Gurman: Will Apple's rumored tap-to-pay system play nice with rivals?

"If Apple lets any app use the new technology, then Square can continue accepting payments via Apple devices."

From "Apple to Rival Square by Turning iPhones Into Payment Terminals" posted Wednesday on Bloomberg:

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.

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 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.

My take: As someone tweeted, it's still vaporware until Epic CEO Tim Sweeney sues Apple for a cut of the payments.

11 Comments

  1. Peter Kropf said:
    Pls send the link to the twitter comment.

    1
    January 27, 2022
  2. Epic’s CEO is Tim Sweeney. I know you were thinking of the incredible soccer player for Manchester United back in the day, Eric Sweeney, but he passed in 1968. I never thought I’d be in a position to defend either Sweeney.

    2
    January 27, 2022
  3. Credit card terminals & associated fees are the bane of every small retailer. My photography store in Annapolis was slammed with fees by PNC, with no hope of escaping the various charges associated with an antiquated credit card terminal. Square, now Block, was a clunky solution but accepted by my customers at various festivals, street fairs and art shows. With my sweet honey business I take cash, checks (remember those?), Venmo and PayPal. A tap of a credit card would be an easy way to sell more jars, pollen, beeswax, and hives. Less chance of a sticky wicket too.

    7
    January 27, 2022
  4. Fred Stein said:
    Oh boy, have I been waiting. Perfect for artisans at fairs and farmers markets, especially the latter, where we see more speciality gourmet treats for increasingly price insensitive foodie buyers.

    Please indulge a mild political rant. This helps small businesses, even as small as one person part-time. By removing risk, including bio infections, and friction for merchants and consumers, Apple increases competition and job creation.

    Oh yeah, investors happy too.

    5
    January 27, 2022
  5. Roger Schutte said:
    This just removes the need for additional hardware like Square’s dongle, right? Aren’t the normal high fees charged by Visa and Mastercard still going to happen when a small business accepts credit cards as payment or are you thinking no fee transfers like Apple Cash will start gaining traction?

    4
    January 27, 2022
  6. Fred Stein said:
    I just got back from 2 wks in Galapagos, Ecuador, where cash, US$, is king. They don’t like CC’s. You see clear higher prices where CC’s are accepted – far higher than 2%. Perhaps there’s some tax evasion, but its mainly about being under-banked, a global phenomena.

    Long term, Apple’s fintech may be more important than crypto, globally, simply by removing friction and lack of access, while levering the good aspects of fiat currencies.

    Pattern, eh? iPhones helped get far more value from the wireless network providers, leaving them intact. Ditto, iPod and the music industry. Ditto mobile games.

    5
    January 27, 2022
  7. Freeing up payment systems & reducing certain transaction fees are only the tip of the mobile banking iceberg. M-pesa, a mobile banking solution in Africa has already lifted a million people out of poverty, though not without controversy. Using a PIN code and text messages you can sell your goats and get paid immediately. You can immediately purchase a refreshing drink with some of your goat profits. Transaction fees can be high. Apple and Android seem poised to use NFC to bring branchless banking features to more people & small businesses. Venmo operates along these lines. Central banks and major commercial banks don’t like this trend as it can make taxes and bank fees tougher to collect. So long as goat farmers in sub-Saharan African were the primary users few objections were aired. As more people shift money around almost anonymously listen for the blowback. Remember how hawalas were used to funnel money to 911 plotters? Bitcoin supports that purpose to some extent, especially for ransom payments. The IRS wants Venmo to surrender transaction data over a certain $$ amount, while the SEC formulates cryptocurrency regs.
    We approach a day when the e-Wallet in our phones becomes our primary banker. Privacy & account security concerns surface. The whole credit reporting system gets upended too. I won’t lose sleep over that but worry hackers & crypto wallet thieves might one day prevail. Apple’s garden wall starts to look more like a virtual chain-link fence topped with concertina wire.

    1
    January 27, 2022
  8. David Drinkwater said:
    My take: long overdue.

    I saw this coming like five years ago, when NFC started to show some acceptance.

    My thinking: base business class iPad SE as menu/kiosk/POS (sales) system. Naturally, with a beacon in it to find it if it wanders off.

    Set a partnership with Aloha bar/restaurant management systems or a good SAP or Oracle integration (don’t know if they exist today, because we ent to SAP) …

    BOOM!!! Profit machine.

    BTW My Watch *can* take instructions to unlock my doors, but it’s flaky. Why not NFC? Still too many fingers, even in limited North Texas cold.

    0
    January 28, 2022

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