What just happened? The rumor mill was right once again. Less than two weeks after rumors suggested Apple would soon announce a feature to turn iPhones into mobile payment card terminals without requiring any extra hardware or third-party devices, Apple has done just that.
The new feature, dubbed Tap to Pay, will allow merchants to accept Apple Pay, contactless credit and debit cards, and other digital wallets with a simple tap to their iPhone. Apple said Stripe will be the first payment platform to offer Tap to Pay on iPhone to their customers, with additional partners to join later this year.
Naturally, Apple Store locations will also support the new payment method.
Once the service goes live, merchants will be able to accept contactless payments using a supported iOS app on iPhone XS or later devices. At checkout, the merchant will have the customer hold their iPhone, Apple Watch, contactless credit or debit card, or other digital wallet near the merchant's iPhone to complete the transaction via NFC technology.
The transaction will be protected using the same tech behind Apple Pay, meaning they are encrypted and processed using the Secure Element. As such, Apple doesn't know what is being purchased or even who is buying it.
Apple Pay is already accepted at more than 90 percent of retailers in the US, so convincing merchants to use iPhones to accept payments isn't going to be a tough sell.
Apple will add Pay on iPhone functionality for developers to use in their SDKs in an upcoming iOS software beta.