Apple
AAPL
is developing a new feature that would enable small businesses to accept payments via credit cards directly on their iPhones without utilizing any extra hardware.
Per a
Bloomberg
report, Apple intends to turn iPhones into payment terminals using the NFC technology similar to Apple Pay. So far, Apple users had to use external third-party hardware like those of financial services company
Block
SQ
to accept payments using an iPhone.
Apple’s new endeavor will allow the company to bypass Block’s hardware by integrating tap-to-pay terminal technology directly into the iPhone using its built-in NFC chip. This new upgrade will work seamlessly with Apple Pay, allowing users to make a payment by simply tapping one iPhone on the back of another.
The NFC payments feature has been designed primarily keeping small business owners in mind who were compelled to use other hardware to accept payments using the iPhone. Apple has recently released iOS 15.3 to the general public, and the new feature can be rolled out as an update in the coming months with iOS 15.4.
Services to Drive Top Line
Apple’s latest effort to develop iPhone as a payment gateway follows the acquisition of Mobeewave in 2020 for around $100 million, per
9TO5Mac
. The iPhone maker has been facing stiff competition across various different segments, thus the new endeavor might be a strategic decision to reduce dependency on third-party sources and reduce competition.
Apple is already under the process of reducing dependency on third-party chip providers including
Intel
INTC
and
Advanced Micro Devices
AMD
and designing home-grown chips.
It has been gaining from continued momentum in the Services business segment that has turned out as the new cash cow for the company and helps in reducing dependency on its one primary source of revenues — the iPhone.
Apple is strengthening its Services and Wearables businesses, which is anticipated to drive top-line growth in fiscal 2022 and beyond.
The company currently has more than 745 million paid subscribers across its Services portfolio. The App Store continues to draw the attention of prominent developers worldwide, helping the company offer appealing new apps that drive App Store traffic.
One of the notable offerings of Apple services business is Apple Pay. It is designed on the basis of NFC technology, and has been gaining traction across several markets. Apple Pay has allowed entry to more than 150 stadiums, ballparks, arenas and entertainment venues globally with contactless tickets.
Apple Pay users can avail public transport in Shanghai, Beijing, Tokyo, Moscow, London and New York. They can also access dorms and services of additional universities across the United States through Apple Watch and iPhone. The growing adoption of contactless payment primarily due to the coronavirus pandemic bodes well for Apple Pay.
However, it has not been clear whether the new feature to accept payment using iPhones will be branded as part of Apple Pay or a standalone feature.
Zacks Rank & a Stock to Consider
Apple, which currently carries a Zacks Rank #3 (Hold), has appreciated 16.5% outperforming its
Computer and Technology industry
peer Intel in the past year.
The Zacks Consensus Estimate for 2022 earnings has moved north by 0.69% in the past 60 days to $5.81 per share.
Intel shares have fallen 7.8% in the past year. The Zacks Consensus Estimate for 2022 earnings has moved north by 0.94% in the past 60 days to $5.28 per share.
A better-performing stock in the same industry is Advanced Micro Devices.
AMD, which currently carries a Zacks Rank #2 (Buy), has appreciated 26.5% in the past year. You can see
the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here
.
The Zacks Consensus Estimate for 2022 earnings has moved upward by a penny in the past 60 days to $2.65 per share.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days.
Click to get this free report
