Apple Wants to Kill Square

Apple Wants to Kill Square

Apple usually waits until its annual Worldwide Developers Conference in June to reveal new software features that replace products by other companies and third-party developers. But the company is kicking things off early this year with the reveal of Tap to Pay, which allows iPhones to function as standalone digital payment terminals.

Basically, this cuts out companies like Square, which offer hardware that connects to an iPhone so small businesses (food truckers, farmers market stands) can accept payments from debit cards, credit cards, smartphones, and other devices that support contactless payments. Tap to Pay should make things even easier for merchants who rely on Square by eliminating additional hardware entirely.

Apple has long been rumoured to be working on this feature, though news of its imminent launch only surfaced via Bloomberg a few weeks ago. In 2020, Apple acquired Canadian startup Mobeewave, which developed tech allowing contactless payments to be made using just a built-in NFC chip, for $US100 ($139) million. The iPhone’s NFC chip enables Apple Pay, and Tap to Pay takes that one step further. 

Apple hasn’t specified exactly when Tap to Pay will be available. The company said it would roll out sometime later this year, and today’s announcement hints that it could arrive as soon as this spring. The feature will be introduced in beta versions of future iOS updates and will be limited to the iPhone XS and newer models. In addition to offering the same security and privacy of Apple Pay — i.e. Apple doesn’t know or collect data on what is being purchased or who the buyer is — Tap to Pay will also be made available to iOS developers and other payment platforms, starting with apps that use Stripe, with other platforms to follow later this year.

Tap to Pay may not be the death of contactless payment systems like Square, assuming it’s also permitted to play nicely with Tap to Pay. The feature will certainly reduce Square’s hardware revenue stream from merchants who no longer need to spend $US49 ($68) on a contactless payment reader, but it remains to be seen if Tap to Pay poses a threat to products like Square’s $US1,200+ ($1,666)+ full cash register systems, which offer far more functionality to larger retail locations.