Another Bite: Apple acquires Mobeewave

August 16, 2020

2 min read

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What's going on here?

Apple has reportedly acquired Canadian SoftPOS company Mobeewave in a deal which could see iPhones turned into contactless payment terminals.

What does this mean?

According to Bloomberg, Apple paid about $100m for Mobeewave and retained its team of employees. Neither company has commented on the transaction. 

Mobeewave lets shoppers tap their credit card or smartphone on another phone to process a payment. The system works with an app and doesn’t require hardware beyond a Near Field Communications (NFC) chip, which iPhones have included since 2014. Rival phone manufacturer Samsung partnered with Mobeewave last year on a pilot point-of-sale program in Canada. Samsung’s venture arm is also an investor in the startup, which has raised more than $20 million, according to PitchBook.

If properly used, this acquisition could put Apple into direct competition with Square (worth $57bn+), the leading provider of payment hardware and software for smartphones and tablets, and iZettle, which was acquired by Paypal in 2018 for $2.2bn.

What's the big picture effect?

Apple generally does not discuss the purpose of its acquisitions, but more often than not they acquire smaller companies in order to make a new feature available on their iPhones.

However, the timing of this deal is ideal; Apple can now position themselves to become the payments service for a new generation of iPhone-based micro-merchants climbing out of the COVID-19 pandemic.  The pandemic has forced many smaller shops that didn’t sell online or accept digital payments to adapt their practices. Therefore, many could look to this technology as a way to not only survive a potential second wave but also to serve a growing population of digital-first consumers. Ketharaman Swaminathan, CEO of GTM360, a banking and payments consulting firm based in Mumbai believes “if Apple finds a way to add a merchant account for uses in the way that Square did, Apple could be in a position to displace millions of Square merchants in the U.S. by virtue of its better user experience.” 

Interestingly, Apple’s acquisition may signify  a move from the technology giant to seize a chunk of the financial market. The decision follows previous innovations over the years including the development of Apple Pay and the launching of Apple Card (via Goldman Sachs). If Apple was to gain a role as the primary customer interface to payments, shuffling banks out of the picture, it could charge banks a fee for being the default payment option if third-party wallets gain dominance. According to Christoffer O. Hernæs, chief technical officer of Norwegian online bank Sbanken, “if Apple succeeds in widespread adoption on both the consumer and merchant side, they could in theory bypass traditional payment schemes and banking infrastructure and process their own payments”. This could have a significant impact on providers such as Visa and Mastercard but also banks that get a portion of their transactional revenues from interchange fees every time a card payment is processed.

Big tech’s appetite for acquisitions is a concern for many. There is a growing consensus that major tech companies are too big and they should be split up. In light of this, it is poignant to consider whether lawmakers would ever allow Apple to enter the finance market.

Report written by Kasey Cummings

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