Jack Dorsey's Block Mitigates Risk From iPhone's Tap-To-Pay By Joining Forces With Apple

Block Inc SQ will soon enable Apple Inc's AAPL contactless payment acceptance feature, 'tap-to-pay' on the iPhone, within Square's point-of-sale app.

What Happened: Block said the new offering would allow sellers to “seamlessly and securely” accept in-person contactless payments using only an iPhone and the Square POS app.

The Jack Dorsey-led company said the service will be launched later in 2022. It also announced an early access program for tap-to-pay on iPhone to allow select sellers to test the new technology.

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Why it Matters: Apple announced its tap-to-pay, a feature underpinned by near-field communications, in February. At the time, it was revealed that Block rival Stripe and Shopify Inc’s SHOP Point would be the first to offer the feature.

Evercore ISI analyst David Togut said in a recent note that while Apple’s tap payment feature was considered a risk to Square’s micro-and mid-market merchant acquiring business, Square’s move has mitigated that risk.

Togut pointed out that Apple Pay is accepted at more than 90% of U.S. retailers, adding that Cupertino's push into electronic payments is expected to continue. 

After tap-to-pay was introduced, Loup Fund analyst Gene Munster had said he was confident Apple was not competing with Square or other third-party payments but “essentially integrating with them.”

Price Action: On Thursday, Block shares spiked 6.8% to $87.48 in regular trading and gained 0.7% in the after-hours session. On the same day, Apple shares closed 1.7% higher at $151.21 in the regular session and rose 0.2% in extended trading, according to data from Benzinga Pro.

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