Apple (AAPL) shares bumped higher Tuesday after the tech giant unveiled its 'Square Killer' payments system that allows users to make contactless purchases on their iPhones.
Apple said the new service, which it dubs "Tap to Pay on iPhone", will allow users to "seamlessly and securely" make purchases using Apple Pay, or other contactless payment methods, imbedded in its signature smartphone or AppleWatch. Shopify (SHOP) and Stripe will be the first to offer the new payments system, Apple said, starting in the spring of this year.
The move by Apple is also seen as a significant challenge to the business model of Block Inc. (SQ), whose Square payments system is found in small and medium-sized businesses around the country.
“As more consumers are tapping to pay with digital wallets and credit cards, Tap to Pay on iPhone will provide businesses with a secure, private, and easy way to accept contactless payments and unlock new checkout experiences using the power, security and convenience of iPhone,” said Apple's vice president for Apple Pay and Apple Wallet Jennifer Bailey.
“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,” he added.
Apple shares were marked 1.9% higher in early afternoon trading Tuesday to change hands at $174.90 each.
Square shares, meanwhile, fell 0.4% to $102.38 each, extending their six-month decline to around 62%. Shopify edged 1.14% higher to $876.78 each.
Late last month, Apple posted record revenues of $124 billion for the three months ending in December, with around $72 billion coming from iPhone sales, that took its global installed base to around 1.88 billion.
Services revenues, which includes payments, rose 24% to a record $19.5 billion, Apple said.
"The growth of Apple Pay has just been stunning. It's been absolutely stunning. And there's still obviously a lot more there to go," Apple CEO Tim Cook told investors on a conference call late last month. "And because there's still a lot of cash in the environment. And so I think that both of these and whatever else we might do have a great future ahead."
