Apple will soon roll out a feature that will let small businesses accept “contactless” payments from customers using their iPhones — setting up a major competitor to rival Square.
Merchants will be able to touch their credit cards — or their iPhones — to another iPhone, according to a Bloomberg report describing the new feature.
Apple could introduce the feature in the coming months, according to Bloomberg. A beta version of its iO5 15.4 operating system is due out before spring. It’s not clear if the new payments system will be part of the new OS.
Apple’s new technology will turn the phone into its own payment processing terminal — eliminating the need for rival payment terminals like those offered by Square or Clover.
Square is the dominant player in the payment terminal space, boasting a 35% share of the point-of-sale systems market.
The new technology will likely be based on Apple’s NFC (near field communications) chip, which is used to process payments through Apple Pay, according to Bloomberg.
In 2020, Apple acquired Canadian startup Mobeewave, which developed technologies for smartphones to accept payments by just tapping a credit card, for $100 million. Since its acquisition, Mobeewave has been absorbed into Apple’s payments division.
Using the new system, payments could be processed using an iPhone by activating Bluetooth and connecting to another terminal.
Shares of Square’s parent company Block fell by more than 3% in early morning trading on Wall Street on Thursday. Apple stock rose by 2%.
Apple has been gradually moving into the finance sector in recent years. It launched the Apple Card, a credit card that enables customers to make interest-fee payments spread out over time.
The titanium credit card — a joint venture between Apple and Goldman Sachs — was unveiled in March 2019, and is designed to be used through Apple Pay, with Apple software helping customers track their spending and payment habits.