Apple announces it will begin allowing third-party developers to utilize iPhone’s payment chip for financial transactions
Date
8/15/2024 8:12:52 AM
(MENAFN) In a landmark decision, Apple has announced that it will begin allowing third-party developers to utilize the iPhone’s payment chip for financial transactions. This move represents a significant shift in the mobile payments landscape, offering banks and other service providers a chance to compete with Apple’s proprietary payment platform, Apple Pay.
The announcement, made on Wednesday, follows considerable pressure from regulators, including European Union authorities, who have pushed for greater competition in the mobile payments sector. The change is set to be implemented with the upcoming IOS 18.1 update, which will introduce the ability for external developers to access the iPhone’s Near Field Communication (NFC) chip.
NFC technology enables the iPhone to communicate with other devices when they are in close proximity, facilitating secure and efficient transactions. By opening up this technology, Apple is allowing third-party payment applications to utilize the chip for various functions. This includes in-store purchases, transportation payments, and access to services such as home and hotel keys, as well as reward cards. Furthermore, Apple plans to extend support to government ID cards in the future.
Users will also have the option to set a third-party payment app as their default payment method, moving away from the exclusive use of Apple Pay. This change aligns with broader efforts to enhance competition and provide more choices for consumers in the financial technology space.
Historically, Apple has been cautious about granting access to its payment chip, citing security concerns and the potential impact on its revenue from Apple Pay transactions. Apple Pay has been a lucrative service for the company, generating revenue from a percentage of transactions processed through its platform.
To address these concerns and regulate access, Apple will require developers to pay a "linked fee" for the use of the chip. This fee will be part of a commercial agreement between Apple and the developers, reflecting the company’s attempt to balance security, revenue, and market competition.
The move marks a pivotal moment for both Apple and the broader mobile payments industry. By opening its NFC chip to third parties, Apple is potentially reshaping the competitive dynamics of financial transactions conducted via smartphones, providing new opportunities for innovation and competition in the payment sector.
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