Apple to roll out Tap-to-Pay feature on iPhones in defiance of Square

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Apple Inc confirmed plans to launch its long-awaited Tap to Pay feature on the iPhone later this year, giving merchants an alternative to Block Inc’s Square technology.

The option will allow sellers to accept payments through Apple Pay, credit cards and digital wallets without additional hardware, the company said in a statement. The system relies on near field communication, or NFC, to connect securely. Apple’s plan, which was previously reported by Bloomberg, sent Block’s shares down as much as 3.2% after it was announced on Tuesday.

“Tap to Pay on iPhone will give businesses a secure, private and easy way to accept contactless payments and unlock new payment experiences,” said Jennifer Bailey, vice president of Apple Pay and Apple Wallet, in the statement.

Apple has been working on the new feature since around 2020, when it paid around $100 million for a Canadian startup called Mobeewave that developed technology for smartphones to accept payments at the touch of a credit card.

The feature includes technology that will allow third-party payment networks to adopt the system for their own users. Stripe Inc. will be the first payment platform to offer the feature to customers, and later this year, Apple said.

“Whether you’re a seller at an internet-first retailer or a sole proprietor, you’ll soon be able to accept contactless payments on a device that’s already in your pocket: your iPhone,” Billy Alvarado, Stripe’s chief commercial officer, said in the statement. .

It’s hard to say how much an implementation could affect Square, whose equipment and services are used by many small businesses. Barclays analyst Ramsey El-Assal said Tuesday there is no immediate threat. After falling Tuesday, shares of Block mostly recovered to close down less than 1% at $102.29.

“We do not expect the inclusion of Apple’s Tap to Pay to have a material impact on current competitive dynamics,” he said.

The feature also highlights a key antitrust argument against the iPhone maker: Apple’s control over mobile payments. Various payment services have complained to governments for years that the tech giant reserves the iPhone’s NFC chip for its own payment system, Apple Pay. The European Union and other entities have investigated Apple for this practice.

The new service can ease those concerns by allowing third-party providers like Stripe to access features. Still, some payment companies are calling for more interoperability. MagicCube Inc. Chief Executive Sam Shawki, whose company makes technology similar to Apple’s new service, is hopeful he can use the iPhone’s NFC chip for his own offering.

The MagicCube service allows third-party applications to accept credit cards with tap to pay. Until now, that system only works in Android due to the closed nature of the iPhone hardware.

“In payments, open solutions work,” he said. “We would love for everyone to be open. Can you imagine if you were a merchant and your system only worked with an iPhone or Android?”

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