Tech giant Apple has announced the launch of its newest iPhone feature for merchants: Tap to Pay. This new feature means that businesses will be able to use their iPhones as a payment terminal, by simply letting customers tap their Apple Pay, contactless credit cards, debit cards such as American Express, Discover, Mastercard, and Visa, and other digital wallets on the business owner’s iPhone to pay for their purchase. Tap to Pay for merchants comes as digital wallets and contactless payments have increasingly become the new standard in the world of payments, which will now provide even faster, secure and easier payments for both customers and businesses.
Becky Owen, North West Regional Managing Director for Bank North commented that;
“Mobile payments and small easy to use merchant terminals have been a gamechanger for SMEs, they have allowed businesses to give their customers more convenient ways to pay. For some businesses, this can be costly with hardware to install and maintain so anything that simplifies this for SME’s & consumers is a step in the right direction as we all move towards a digital future.
“The entrance of Apple and other large tech companies, such as Google, to the market could help to drive down costs and increase innovation. With most of us owning an iPhone having the ability to take customer payments directly is sure to be welcomed by many SMEs. As the high street faces ever-strengthening competition from online retailers, anything to reduce merchant friction is great.”
Key points:
- Apple’s new feature Tap to Pay will allow merchants to complete payments and transactions via their iPhone
- Tap to Pay will allow a cheap and easily accessible alternative to conventional payment methods
- The feature will be initially rolled out in the US later this year
How does Tap to Pay work?
In order to benefit from the Tap to Pay feature, the merchant will need to download a supported iOS app on an iPhone XS or later iPhone device. Although yet unclear, it seems that older models such as the iPhone 6, 7, and 8 may not be compatible with this new feature.
To pay, the merchant will prompt the customer to hold down their digital wallet or contactless card above the iPhone and the transaction will then be securely completed using NFC technology.
How does Tap to Pay benefit businesses?
The use of Apple’s new feature will eliminate the need for businesses to have additional hardware or terminals to enable payments. On average the costs for payment terminals ranging between 0.25%[1] to 3.5%[2] in processing fees for each card transaction and include various other miscellaneous such as terminal charges, authorization, gateway and compliance fees[3]. Overall, this feature provides a cheaper alternative to conventional payment methods, being particularly attractive for businesses in the context of a drastic decrease in cash payments, partly due to the current Covid-19 pandemic but also due to the increasing digitalization of transactions. Additionally, with most of us already owning an iPhone, the easy accessibility of Tap to Pay will also significantly benefit SME’s, allowing them to gain more reach and sell their products to a wider audience without needing to invest in costly payment terminals.
How safe is Tap to Pay?
As highlighted in Apple’s press release, privacy is a key aspect in the design and development of their payment features. This includes the new Tap and Pay feature, where the payment data will be encrypted and processed using Apple’s Secure Element.
When will Tap to Pay be launched?
Apple announced that their new feature will roll out in the US later this year, with the bank-as-service API Stripe being the first platform to offer the Tap to Pay characteristic. Although the feature will only be available in the US for the time being, we’re hoping to see Tap to Pay being rolled out worldwide very soon!
[1] https://cardmachine.co.uk/choosing-merchant-service-provider/
[2] https://www.fool.com/the-ascent/research/average-credit-card-processing-fees-costs-america/
[3] https://cardmachine.co.uk/choosing-merchant-service-provider/
Author spike.digital