The news of Apple’s recent decision to make NFC capabilities for payment cards available to app developers continues to grab headlines as fintech investors ruminate on where disruption in the payments ecosystem will be felt most.
In this clip from “The Future of Fintech” on Motley Fool Live, recorded on Feb. 10, Motley Fool contributors Matt Frankel, Jason Hall, and Will Healy discuss and analyze Apple’s recent announcement that could potentially put a dent in fintech stocks but could also be a big win for small businesses.
A persistent misconception that comes up again in this discussion is that this new feature gives any iPhone user the ability to accept card payments, and facilitates P2P payments just by tapping phones together or tapping a card on the phone. This is not the case; there is no inherent payment processing capabilities in the iPhone. This announcement simply makes NFC card-reading capabilities available to developers that have payment processing apps, and is why Stripe was announced as being the first to integrate this technology with their payment processing app.
This will be a potential win for Square as well. Square was first to market with an innovative card reader that connected to the audio jack on an iPhone and enabled the user to swipe credit/debit cards. Since that time, iPhones no longer have audio jacks, and cards have evolved from magnetic stripe technology to EMV chips and NFC. Square has a Bluetooth-connected chip card reader that works with its payment processing app, but connecting, charging, and managing a separate device is sub-optimal for Square users. The iPhone’s ability to read cards directly, eliminating the need for a separate device, has the potential to increase the utility of Square’s app if they integrate to the new functionality.
Overview by Don Apgar, Director, Merchant Services Advisory Practice at Mercator Advisory Group