Can the payment industry benefit from Apple’s “Tap to Pay”?

By Puja Sharma

With Apple entering the SoftPoS space, this validates the technology and will put further pressure on the traditional POS manufacturers who have failed to successfully address the SME market. It is important to note that Apple currently represents around 30% of the market share, while Android remains the dominant OS.

Tap to Pay will be introduced on iPhones by Apple. As a result of the new capability, millions of merchants across the US, from small businesses to large retailers, will be able to seamlessly and securely accept Apple Pay, contactless credit cards, and other digital wallets via a simple tap on their iPhone – no additional hardware or payment terminal is required. Payment platforms and app developers will be able to integrate Tap to Pay on iPhone into their apps and offer it as a payment option to their business customers.

To offer Tap to Pay on the iPhone to millions of merchants in the US, Apple will collaborate with leading payment platforms and app developers across the payments and commerce industry. As a payment and commerce tool, Tap to Pay on iPhone complements and enhances the robust set of tools that payment platforms and app developers provide to their merchant clients to help them run and grow their businesses. Contactless credit and debit cards from American Express, Discover, Mastercard, and Visa will work with Tap to Pay on iPhone.

What would it mean for its peers?

Square, which dominates the market, could be affected by the move if it relies on Apple’s iPhones for sales. If Apple allows any app to make use of the new technology, Square can continue accepting payments through Apple devices without having to provide its hardware. It could directly compete with Square if it required merchants to use Apple Pay or its payment processing system.

“Apple’s foray into accepting payments will be a game-changer for small businesses and consumers with an occasional need to accept payments. Players like SumUp, Square, and PayPal’s Zettle have a choice to either collaborate or compete with Apple; More importantly, it is the hardware providers who could face an existential threat – reducing the need for small payment acceptance terminals,” said Jan-Willem Weggemans, Cloud, Data and APIs Lead at digital consultancy Publicis Sapient.

“It is a busy and well-served market, with Samsung already offering a similar service since 2019, called Samsun Pay Touch. To change people’s habits and win share, Apple has its work cut out to create a differentiated proposition with a unique customer experience to win both new customers and ensure usage growth of the new solution,” Weggemans added.

Way forward

Mobile devices are becoming the core hardware estate for businesses across a range of verticals. For example, in the transport sector, taxis are now using tablets to run in-ride advertisements as well as accept contactless payments. These all-in-one solutions are powered by software point of sale (SoftPoS) technology, streamlining hardware estate to deliver more functions on fewer devices. This reduces costs for merchants by helping them sell more while also offering a cheaper alternative to traditional payment terminals.

“One of the biggest challenges to the widespread adoption of software point of sale (SoftPoS), the technology that enables merchants to accept card payments directly on their phone or mobile device, is that up until now, it was not supported by iOS operating systems. It is great to see that the tech giant, through its acquisition of Mobeewave, address this demand in the market. This appetite is only going to grow as consumers continue to turn their back on cash in favour of contactless payments,” said Brad Hyett, CEO at Phos. 

“With Apple entering the SoftPoS space, this validates the technology and will put further pressure on the traditional POS manufacturers who have failed to successfully address the SME market. It is important to note that Apple currently represents around 30% of the market share, while Android remains the dominant OS,” he added.

Expectations of what a business will look like in the future have changed fundamentally. With the rise of ‘covidpreneurs’ over the last 18 months, there has been a global surge in sole traders who are choosing more fulfilling employment over a steady paycheck. This shift in the makeup of the global economy is driving the rise of an ‘application marketplace’, whereby business functions are increasingly moving onto the mobile devices of business owners. That is, these new market entrepreneurs are increasingly running their business out of a tablet or mobile device, rather than traditional PCs and other legacy systems.