With its acquisition of Montreal-based Mobeewave, Apple has placed a long-term bet on where it sees the payments industry headed.
Mobeewave’s technology uses NFC to turn iPhones into mobile card acceptance terminals without a hardware dongle popularized by the likes of Square, Clover and iZettle. With Apple now set to pack this capability into the iPhone alongside P2P payments through Apple Pay Cash and credit services introduced last year with Apple Card, Apple is rapidly developing a formidable payments stack that should raise concerns among both mobile point of sale providers and larger processors.
The timing is ideal, as Apple is now positioned to become the payments service for a new generation of iPhone-based micro-merchants climbing out of the pandemic. Many smaller shops that didn't sell online or didn't accept digital payments are adding the capability as a way to not only survive the pandemic but to serve a growing population of digital-first consumers.
Building mPOS capabilities into the handset isn’t revolutionary — Samsung Electronics partnered with Mobeewave last year to achieve a similar service, and India and other emerging markets support phone-to-phone purchasing through various technology approaches.
The mPOS revolution Square launched over a decade ago in the U.S. has evolved and matured to the point where Square and key rivals including Fiserv’s Clover and PayPal's iZettle offer smaller merchants a range of services beyond one-to-one handset purchases. Most of these companies' offerings look far different from the simple plastic magstripe reader Square originally sold in drug stores for $10 apiece.
But Square built its market share through micro-merchants like those Apple is likely to go after with its mPOS solution, and Apple typically has reshaped markets it’s entered, observers note.
Apple paid $100 million to purchase Mobeewave,
Though mobile payments at the point of sale have been slow to catch on, Apple Pay has become a juggernaut in digital and embedded payments, and the Cupertino, Calif.-based tech giant has demonstrated unwavering commitment to its vision of devices becoming the focus of payments.
“If Apple finds a way to add a merchant account for uses in the way that Square did, Apple could be in a position to displace millions of Square merchants in the U.S. by virtue of its better user experience,” said Ketharaman Swaminathan, CEO of GTM360, a banking and payments consulting firm based in Mumbai who closely tracks mPOS technology.
The card networks’ requirement for mPOS services to accept a PIN for security is one hurdle Apple will need to overcome with a simple tap-to-pay mPOS approach, but biometric authentication could solve that, suggested Richard Crone, a principal with Crone Consulting LLC.
“It could be a PIN-on-glass approach, but in a world with TouchID, Face ID and two-factor authentication, there are a lot of ways biometrics could serve security here,” Crone said.
The pandemic created a perfect opportunity for Apple to capture new users who need to accept payments through immediate channels, Crone said.
“COVID opened up everybody’s cellphone to be an acquiring terminal, with the rise of contactless payments and the fact that in the new ‘Zoom economy,’ a lot of services from consulting to athletic coaches to psychologists have been displaced from their offices. Apple has an opportunity here to vastly expand its business and functionality across the payments landscape,” he said.
Both large and small acquirers should take note of Apple’s capabilities to gain market share following massive business disruptions, Crone warned.
“This is really a wake-up call for the acquiring industry,” he said.
