Apple’s Monopoly; Updates to pay

Apple’s dominance of technology and online service offerings has recently been expanded as it plans to turn certain iPhones into payment terminals and introduce its very own ‘Buy now, pay later’. Revealed to be released in the latest IOS16 update, Apple is taking on fintech giants Square, PayPal and the crowd favourite, Venmo, by allowing users to tap their iPhones against each other to receive or make payments. This technological development is made possible by activating the NFC chip at the top of the iPhone (see figure 1) to respond to payments.

One of the current market leaders in the Industry, Block (formerly Square), were leaders in the fintech space as they created the square payment system that allowed users to use their tablets, computers and mobile phones attached with their square reader that read the card details. This was revolutionary at the time, reducing the cost for small businesses and sole traders to access credit card payments without the traditional bulky and expensive terminals. This was also paired with the mobile application that supported the accessories and allowed the payment receiver to manage financial transactions. So, with the recent news that Apple has entered this space, removing the need for third party applications such as Square and Venmo, what does this mean for them?

Square is fortunate enough to have over 30 million[1] using its application across both Android and IOS as well as Venmo boasting more than 83 million[2]Venmo – Share Payments users and this proves to be hard for Apple to convince. Square has already announced that it will integrate its app with the IOS feature by allowing merchants to still use its applications features including billing, receipts and data storing but at the convenience of tapping phones.

Would businesses be onboard?

From the mind of merchants, such a casual way of payment may not be as widely adopted at first. Square has been able to do so well with businesses because of its ability to remain convenient, affordable, as well as professional. Many people will be reluctant to pay for a product by tapping another person’s phone, so the professional financial transaction will be lost. So where does Apple plan to gain most of its market share from? In the age and convenience of splitting bills and transferring money in seconds, the first market they would target would be the younger demographic. This will in the short term increase the use of the Apple wallet and from there Apple would have to devise a plan to build the trust of businesses suggesting this is the most convenient and professional payment method moving forward. 

Figure 1