Does Apple plan an Apple Pay surprise as Tap to Pay hits beta?

Apple has played yet another hand as it continues to become even more relevant to business, introducing APIs in its latest beta to support the ‘Tap To Pay’ feature that turns iPhones (XR/XS or later) into payment card readers.

Tap to Pay on iPhone is now in beta testing

Following weeks of speculation, the company confirmed its plan to let businesses use their iPhones to accept payments in early February. The idea behind this is that merchants can use their iPhone to accept payments from Apple Pay, contactless credit and contactless debit card transactions, and payments from other digital wallets. The phone itself becomes the card reader, no third-party device required — just a supporting payment app.

Like Apple Business Essentials, this system is likely to be of real benefit to small and mid-sized businesses (SMBs), as well as to larger enterprises.

When Tap to Pay was announced, Jennifer Bailey, Apple’s vice president of Apple Pay and Apple Wallet said: “As more and more consumers are tapping to pay with digital wallets and credit cards, Tap to Pay on iPhone will provide businesses with a secure, private, and easy way to accept contactless payments and unlock new checkout experiences using the power, security, and convenience of iPhone.”

In use, your business may choose to use iPhones as payment terminals to accept digital payments. In addition to supporting regular credit and debit cards, the feature is also compatible with store cards and rewards passes.

Tap to Pay is expected to be made available in the US this spring.

Payment providers are working with the API

The Tap-to-Pay API was enabled in iOS 15.4 so payment platforms and app developers can build in support to offer payment as an option to business customers. It may also be worth noting that a new feature spotted in iOS 15.5 Beta 2 also lets users pay money from iPhone to iPhone with a tap.

Both Stripe and Adyen have already confirmed plans to support Tap to Pay on iPhone and have begun testing the API with that aim in mind. Adyen is working to support the feature across its enterprise customers and commerce platforms, such as Lightspeed Commerce and NewStore.

“Adyen has been at the forefront of innovation with NewStore since our inception. Together, we have already put iPhones in the hands of thousands of store associates. Now, these devices can become payment terminals with no additional hardware,” Stephan Schambach, founder and CEO of NewStore, said in a statement.

Launch is looming

Tap to Pay is expected to launch for real this spring (both Stripe and Adyen say they will enable the services around then) and I imagine other payment service providers who are already working with Apple Pay will also introduce support for it over time. Businesses using Tap to Pay should also register with Apple Business Register.

Apple is doing a lot of work to shore up and extend its Apple Pay services and systems, including steadily introducing on-device support for government ID.

Of course, once an iPhone becomes your passport and your driving license, it also becomes a point of trust for additional payment and identity services.

When it comes to payments, the company is currently pivoting to replace Apple account cards with something called Account Pass, which can be pre-loaded with cash to purchase items from Apple online and at retail. The company also reached a new deal under which Apple Cash now uses Visa’s payment network, sparking speculation it may extend that service — and possibly also Apple Card — outside the US.

The significance of its recent move to acquire innovative credit scoring company, Credit Kudos, hasn’t yet emerged, but it is worth noting that Tap to Pay on iPhone seems to make use of technologies Apple acquired when it purchased Mobeewave.

Why I think Apple is putting a plan together

The level of activity suggests the company may have additional intentions, possibly extending to the introduction of additional payment services, such as Apple-designed ‘Buy Now, Pay Later’ schemes, which current speculation suggests it is considering.

It is interesting that activity around this side of Apple’s business does appear to be intensifying just over three years since Apple launched Apple Card. Cupertino clearly sees a big opportunity as the entire payment sector transforms into a digital and frictionless opportunity spot in which taking and or making payments becomes as easy and habitual as switching on a water tap.

While this transformation is an opportunity in advanced economies, for emerging economies this kind of simplicity and reach should translate into economic opportunity for the world’s unbanked. “I think creating products and services that address a lower income segment without super high fees or high minimums is important,” said Jennifer Bailey, Apple’s vice president for internet services, in 2019.

JD Power’s Jim Miller in 2019 told me: “Banks have the advantage of trust and existing customer relationships, but as we have seen, if they don’t innovate, competitors can easily move in, especially were they are not protected by regulations.”

Apple appears to think the same thing.

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