Apple will introduce its Tap to Pay feature for iPhones later this year, which will allow businesses to use mobile devices as a terminal for contactless payments.
The move is aimed at small businesses.
Apple chief executive Tim Cook said in a tweet on Wednesday that Tap to Pay is "a great way for millions of small businesses to accept contactless payments right from their iPhone".
"It’s easy, secure and will be coming out later this year," Mr Cook said.
The feature, which will initially be available in the US, will also work with contactless cards and digital wallets, and requires no additional hardware, Apple said in a newsroom post.
It did not, however, say when the new service will be available outside the US.
Tap to Pay will be first offered by Stripe, the San Francisco-based financial services provider, and will also be integrated into Shopify's PoS app soon. More platforms and apps are set to follow later this year, Apple added.
“In collaboration with payment platforms, app developers and payment networks, we’re making it easier than ever for businesses of all sizes – from solopreneurs to large retailers – to seamlessly accept contactless payments and continue to grow their business," Jennifer Bailey, vice president of Apple Pay and Apple Wallet, said in the post.
Tap to Pay will work on the iPhone XS and later models, and will also be accessible with an Apple Watch. Transactions will be "securely completed" using near-field communication technology, the company said.
Apple's announcement comes at a time when businesses and consumers alike are becoming more accustomed to using contactless methods to conduct transactions, owing to the convenience and increased security they bring.
The global contactless payment market is expected to hit more than $12.6 trillion by 2030, growing by 24.2 per cent annually from 2020 to 2030, figures compiled by Research and Markets show.
About 60 per cent of small businesses globally are already – or planning to go – cashless by 2024, or have already done so, with three quarters saying that accepting new forms of payment is critical to business growth, a January study by Visa found.
The contactless payment and small businesses sectors are both being driven by improved support, technological advancements in digital platforms and mobile devices, as well the fall-out from the Covid-19 pandemic, which has significantly altered consumers' shopping and spending habits.
There are an estimated 32.5 million small businesses in the US, accounting for nearly all – 99.9 per cent – of businesses in the world's largest economy, according to the Small Business Administration, a US government agency. Before the pandemic, the sector created 1.5 million jobs annually and accounted for around 64 per cent of new jobs created in the US, it added.
vice president of Apple Pay and Apple Wallet
The introduction of Tap to Pay further strengthens Apple's financial services offerings, joining its flagship cashless service Apple Pay, its peer-to-peer service Apple Pay Cash and the Goldman Sachs-backed Apple Card.
Apple said that, as with its other financial services, customers' payment data on Tap to Pay is protected, with all transactions encrypted. With Apple Pay, the company doesn’t know what is being purchased or who is buying it.
These financial features are part of Apple's services portfolio, which reaped $19.5 billion in revenue in its fiscal 2022 first quarter, up almost a quarter on an annual basis.
Cupertino-based Apple posted record quarterly sales and net profit during the three-month period despite supply chain challenges, with profit increasing more than 20 per cent to about $35bn from the same period in the previous year and revenue rising 11.2 per cent a year to more than $123.9bn.
Apple, the world's most valuable company, is also expected to launch a new low-cost iPhone and an updated iPad on March 8, Bloomberg reported last week, citing sources.
