Look out Square: iPhones may soon become contactless payment terminals

Your iPhone may soon be capable of accepting contactless debit and credit card payments with just a tap of the card. That’s according to a report out from Bloomberg, which suggests the new feature will essentially make third-party iPhone contactless terminal accessories redundant:

In order to accept payments on an iPhone today, merchants need to use payment terminals that plug in or communicate with the phone via Bluetooth. The upcoming feature will instead turn the iPhone into a payment terminal, letting users such as food trucks and hair stylists accept payments with the tap of a credit card or another iPhone onto the back of their device.

According to the report, the new feature will leverage the iPhone’s existing NFC chip, which will talk to the debit or credit card’s built-in contactless chip. In other words, it’ll work just like contactless payments work today on tens of millions of terminals around the world. This is bad news for Square, the market leader in mobile contactless payments. Square’s existing solution requires an accessory that is connected to the iPhone that handles the contactless connection.

And the new contactless feature could be coming to iPhones a lot sooner than you think. Bloomberg says the feature will be included in the upcoming iOS 15.4 update, which is expected to launch this spring. Since iPhones have had NFC chips in them for close to five years, it’s likely the new contactless feature will be enabled on all iPhones going back to the iPhone 7.

After the Bloomberg report, Square’s stock is down almost 3% in premarket trading at the time of this writing. Twitter founder Jack Dorsey founded Square in 2009 and is still its CEO. Apple is thought to be leveraging the technology it acquired when it bought Canadian payment startup Mobeewave in 2020 for $100 million.

We’ve reached out to Apple for comment on its upcoming contactless plans and will update this article if we hear back.