An Apple feature that allows iPhones to serve as mobile point-of-sale terminals is getting a first look at payments processor Adyen, which sees the innovation as an additional option for combining purchases and payments as traditional payment hardware is fading.
“Depending on how many use cases you have for your business, this could be an add-on option or a replacement under certain circumstances,” said Kamran Zaki, chief operating officer at Adyen. “If you want some associates to be more mobile, you can do that. You can have some in a fixed location and some who don’t have to go back to the counter to make payment.”
Adyen recently adopted Apple’s Tap to Pay, which allows businesses to use iPhones for contactless payments. The technology is Apple’s entry into point-of-sale acceptance, although the feature is not a full-fledged payment processing system. Tap to Pay from Apple requires a third-party app to work, allowing payment processors to work with Apple while minimizing more traditional point-of-sale systems.
Adyen’s rollout is pushing hardware point-of-sale terminals toward obsolescence, said Stephan Schambach, founder and CEO of NewStore, one of Adyen’s first partners on the Tap to Pay rollout. NewStore sells a cloud-hosted platform for point-of-sale, order management, inventory and consumer applications, with customers including retailers UNTUCKit, Marine Layer, Burton and Faherty.
“The main impact is that payment is going to be more natural and convenient,” Schambach said, adding that the integration is being pilot tested with two customers in New York before a wider rollout in the coming months. “They can use the same app to check out items or sell items that aren’t available in the store but are online.”
Adyen hopes to expand its ability to offer omnichannel payments and shopping. The processor’s customer base is primarily corporate or mid-sized businesses, which is a different market than Square’s and PayPal’s main merchants, typically sole proprietors like plumbers, dog walkers, or merchants single location. “This is an incremental technology update option for these companies as their needs change,” Zaki said.
Apple introduces Tap to Pay in February, allowing consumers to make payments by tapping a contactless card or mobile wallet on a merchant’s iPhone. Although the merchant is still required to use a payment acceptance app, they no longer need to use a Bluetooth plug-in or card reader, making it easier for store staff to use its own devices for consumer checkouts.
Apple’s initial partners included Stripe, which uses an application programming interface to enable merchants to support digital payment technology. Apple had no comment.
Apple introduces Tap to Pay in a similar way to Apple Pay, which launched without a card attached. Apple Pay required consumers to register a payment card when the app launched in 2014. Apple then partnered with Goldman Sachs to issue its own Apple Card, so it’s possible Tap to Pay could eventually turn into a merchant acquisition and processing vehicle for Apple. But for now, Tap to Pay is an option designed to make it easier for merchants to support contactless payments.
“Migration from point of sale to off-the-shelf commerce [COTS] is the next logical step to increasing access and reducing the costs of physical global trade,” said Thad Peterson, Strategic Advisor at Aite-Novarica.
But there’s still a long way to go before COTS-supported payments mature, according to Peterson, noting that Adyen offers an iPhone solution, which would limit its value for organizations and markets where Android devices maintain a significant presence.
If a “soft POS” solution is to be generally accepted and used by a wide range of merchants in different markets, an Android option must be available, Peterson said. “While the initial growth of tap-to-pay on COTS will be an app on a smartphone, it is possible and perhaps likely that the technology will spawn new generations of devices to enable transactions,” Peterson said. “Agnostic solutions including Apple, Android and probably Huawei will need to be in place and available for this to happen.”
Adyen did not respond to questions about its intention to partner with Android to provide smartphone acceptance in a manner similar to iPhone’s Tap to Pay. So far, Adyen’s work with android included original equipment manufacturer, or OEM, API integration to read card data and communicate with the Adyen platform for payment processing.
Payment terminal technology companies have responded to the digitization trend. Ingenico Axium The product line, which uses the Android operating system to support business payments and services, was introduced in Europe and is currently being tested in North America.
Axium includes a point-of-sale card reader that is being updated to move its technology to the cloud, potentially supporting a wider range of computing devices. Ingenico has also added technology that enables payments via a smart card reader and a paired mobile app.
Newly appointed Diebold Nixdorf Octavio Marquez as President and CEO to help the company continue to digitize bank payment technology. NCR in 2021 acquired Cardtronics so that it can offer cloud-based services to banks and credit unions through the Allpoint ATM network.
And Verifone website emphasizes an “omnichannel” experience that spans online and offline retail. Adyen said it will continue to work with point-of-sale technology manufacturers as well. “The payout mix will vary a bit for each merchant,” Zaki said. “Apple is a great partner, but we don’t exclude” others.