Apple is working on a new service that will enable small companies to receive payments directly on their iPhones without the need for any additional hardware, such as Square terminals from Block Inc.
Bloomberg claimed, citing people familiar with the topic, that the new feature converts the iPhone into a payment terminal, allowing merchants to receive fees by tapping a credit card or another iPhone onto the rear of their device.
According to Bloomberg, Apple has been working on the new feature since 2020, when it paid about $100 million for Canadian startup Mobeewave, which allows devices to process credit card payments.
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According to the source, the system will most likely use the iPhones near field communications chip to receive payments, which is now used for Apple Pay.
“This basically allows Apple to avoid releasing new hardware because a significant number of customers already have iPhones in their pockets,” said Edward Jones analyst Logan Purk.
Some business owners, though, may be hesitant to move until Apple can produce a cheaper product and a simpler platform, according to Purk.
Square presently charges $299 for its device, plus a transaction fee of 2.6 percent plus 10 cents.
If Apple maintains its new service limited to its applications or payment system, it will sidestep Square’s services, which are frequently utilized by small businesses. It might also hurt companies like Verifone and Ingenico, who build point-of-sale machines.
The firm has been expanding its fintech offerings. It partnered with Goldman Sachs to introduce its own credit card in 2019 and is apparently working on a “buy now, pay later” solution.
