Digital Transactions | Featured Alex Ferguson, TSG Senior Research Analyst
Square intrigued the payments industry a decade ago when it emerged to provide small sellers with a simple dongle they could attach to a mobile phone to accept card payments. Now Square says it’s moving to the next step—payments directly on a mobile device. The company announced Thursday that later this year it will adopt Apple Inc.’s new Tap to Pay technology, which lets merchants take card payments directly on Apple’s iPhone.
Square’s move represents a major step forward for Apple’s technology. Apple earlier had signed up other major payments players, including Stripe Inc. and Adyen NV, to deploy Tap to Pay, which is particularly aimed at small sellers.
“One of the biggest drivers of merchant interest in SoftPOS is the elimination of hardware and leasing costs, which have historically been one of the biggest barriers of entry for [small merchants] and micro merchants, and one of the fundamental problems Square initially set to solve with their original dongles that put them on the map,” notes Alex Ferguson, a senior research analyst at The Strawhecker Group, an Omaha-based consulting firm.
Now, with the insertion of Apple’s technology into the Square merchant base, SoftPOS technology may be poised for faster adoption, says Ferguson, who argues the technology has been slow to catch on up to now. “Apple’s inclusion is certainly an altering variable in the SoftPOS adoption equation, especially as iOS is a much more utilized platform in the U.S.,” he says. “This, paired with Square and Stripe’s atypical inclusion into Apple’s previously insular development of the feature, could be enough to shift the trend of the past couple of years.”
Tap to Pay is the result of two years of development at Cupertino, Calif.-based Apple, which in 2020 acquired a small Canadian company called Mobeewave that had built the technology. But Apple’s rivals in this market aren’t conceding any ground in the wake of Square’s announcement.