Could Apple Wallet, Open Banking and SoftPOS be the holy trinity of payments?

By Alex Reddish, Managing Director of Tribe Payments

Apple’s “Scary Fast” Halloween product event unveiled the super-charged M3 chip. Still, the tech giant’s new iPhone Wallet app launch was slipping under the media radar – now integrated with the UK’s Open Banking framework. With the dominance of the Apple Wallet, its contactless ‘Tap to Pay’ tech, and now Open Banking data, Apple’s three-pronged move into payments promises a world where traditional friction points and blockages to merchant acceptance are eliminated.

Apple’s Open Banking integration in the UK couldn’t have been timed better, with 11% of UK consumers and 17% of small businesses now active users of Open Banking, with transaction numbers climbing every month.

Previously, Apple’s Wallet app could only store UK users’ credit card and debit cards to make tokenised online or in-store payments. But the integration of iOS 17.1 with the UK’s Open Banking API means Apple’s UK iPhone users can now view the balance of their current accounts, bank cards and credit cards within Apple’s Wallet app and choose which account they want to pay from. For example, consumers can choose not to add to existing credit card balances and instead pay directly from their current account.

So far, major UK banks Barclays, HSBC, Lloyds, RBS, and neobanks Starling and Monzo have signed up to share Open Banking data with Apple, and while banks may be concerned about disintermediation from their mobile apps, it will be difficult to resist the accompanying rise in transaction volumes and increased customer stickiness.

For merchants, Apple’s Open Banking integration means their iPhone-owning customers can make account-to-account (A2A) payments and cut out cards altogether. With A2A, merchants can benefit from higher conversion rates, reduced transaction costs, and instant settlement.

But Apple is also enabling merchants to bypass the limitations of hardware POS terminals through its ‘Tap to Pay’ rollout, turning iPhones into SoftPOS terminals capable of accepting contactless card and digital wallet transactions, eliminating the need for separate card readers.

According to a recent Tribe Payments survey, over 80% of merchants want to improve their customers’ experience, but keeping costs down remains a key priority. Merchants, especially smaller or micro-merchants, don’t want the hassle of hardware that’s time-consuming to install, expensive to maintain, and difficult to upgrade every time a new payment method or industry standard emerges, like PCI DSS. In contrast, SoftPOS solutions like Tap to Pay enable untethered payment acceptance, available wherever the merchant takes their iPhone, with remote updates delivered over-the-air.

Additionally, cash can’t tell a merchant what items customers like to browse before buying, nor can it tell them their average spend or where they like to spend it. With SoftPOS, those cash-heavy merchants can now start accepting card and digital wallet payments with just their iPhones, boost their revenues, and gain new data-driven customer insights.

Why merchant acquirers need to support SoftPOS

SoftPOS, when integrated with risk monitoring, reporting, inventory, and invoicing management, can generate even more benefits for merchants. But, to do that, acquiring banks will need to provide a single platform that supports all channels and transaction types. Tribe’s modular technology and SoftPOS offering simplify in-person mobile and SoftPOS payments for large retail chains and micro businesses.

The broader picture is that no matter which payment method is used, data’s value is maximised when it is used to anticipate consumer behaviour to create hyper-personalised experiences that they demand. As for the future? With CBDCs now in development globally, they’ll need to be stored somewhere and be able to interact with digital wallets. Apple Wallet offers a ready-made home with instant contactless and Open Banking functionalities.

Ultimately, Apple’s expansion into payments is throwing down the gauntlet to banks to deliver the dynamic digital payment services that merchants are craving to satisfy their customers.