Six Colors
Six Colors

by Jason Snell & Dan Moren

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Apple will let iPhones accept contactless payments later this year

Apple Newsroom:

The new capability will empower millions of merchants across the US, from small businesses to large retailers, to use their iPhone to seamlessly and securely accept Apple Pay, contactless credit and debit cards, and other digital wallets through a simple tap to their iPhone — no additional hardware or payment terminal needed.

This feature has been much rumored in the last couple weeks, though I’m surprised to see Apple announce it in a press release—maybe this is about getting ahead of the people who dig into software releases to find unannounced features.

What struck me as interesting is that Apple seems to specifically be targeting merchants using third-party apps for this feature:

Tap to Pay on iPhone will be available for payment platforms and app developers to integrate into their iOS apps and offer as a payment option to their business customers. Stripe will be the first payment platform to offer Tap to Pay on iPhone to their business customers, including the Shopify Point of Sale app this spring. Additional payment platforms and apps will follow later this year.

This suggests that it’s more about a software framework available to developers than a feature built into the OS—i.e. allowing developers to create apps that accept payments using the built-in NFC chip.

A couple notable omissions: there’s no mention in here of Apple Cash (née Apple Pay Cash), so you may not be using this feature to, say, pay your friend back for those movie tickets1. One possible reason: Apple Cash remains unavailable to customers outside the U.S.

Also absent is any mention of the iPad, with good reason: current iPads don’t have NFC chips built-in.2 Though with an iPad Air refresh Reportedly waiting in the wings, it’s entirely possible that Apple’s waiting to roll out that feature alongside a hardware announcement in March. Hard not to imagine that Apple would like the ability for an iPad to act as a point of sale terminal right out of the box.

That last raises question about the future of third parties like Toast and Square, both of which offer their own hardware add-ons to turn iPads into POS terminals. But given Apple’s note of “additional payment platforms and apps” coming later this year, those companies would probably build support for iPhones and future iPads offering this feature—and, as the replacement time on iPads can often be several years, their hardware products will probably still have relevance for some years to come.

Moreover, there are two strategic considerations to take into account here: first, this is probably good for Apple’s Services revenue, as it means more places that will potentially accept Apple Pay.

And second, this move may be about avoiding regulation. In 2020, the European Commission launched an antitrust investigation into Apple’s limitation of access to NFC payments, though the primary concern in that case was that only Apple Pay had the ability to make payments. As far as Apple’s press release suggests today, this is purely about the ability to accept payments. It’ll be interesting to see if that moves the needle for the EC at all, but something tells me it’ll probably still have objections.

  1. Ha ha, just kidding, who goes to the movies anymore? 
  2. A couple models like the iPad Air 2 and mini 3 did have an NFC chip built-in, but they were never available via software. 
—Linked by Dan Moren

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