Software-led solutions are popularizing, promising a brighter future for retailers who wish to utilize their smartphones to take payments. Will Square lead this front once again?

Square Inc. changed the face of payments in the past decade when it rolled out a groundbreaking dongle that powered iPhones to take card payments. Still, the world never paid attention to the app’s ability to take a manual payment when the merchant keyed in the shopper’s card details without needing other gadgets.

A decade later, payment terminals now encounter new challenges. Regardless of the initial concerns about smartphones’ safety and functionality in , these hand-held gadgets have continued playing a critical role in payments. Then came Covid-19 and the fear of touching shared items, and boom! Contactless payment avenues were the talk of the town. This triggered the use of contactless-ready chip cards and smartphones, further supporting mobile payments.

The latest improvements will leave smartphones as the sole software-only payment terminal, otherwise known as soft POS, for contact-free payments. Last year, around August, Visa Inc. partnered with MagicCube Inc., a Silicon Valley fintech company that engineers software-ready contactless payment solutions for existing smartphones and mobile devices. The deal cemented when Visa was launching its “Tap to Phone” campaign, an initiative that seeks to expand digital & contactless payments.

The same month kicked off with Apple Inc.’s jaw-dropping acquisition of Montreal-headquartered Mobeewave Inc. A year before (In Oct. 2019), Mobeewave, in collaboration with Samsung Electronics Co. Ltd., had rolled out a solution that powered smartphones without dongles or other card-reader capabilities to enable payments between a contactless card and the device via NFC.

A Chip on Your Phone

All these improvements are part of what Square began a decade ago. The primary driving factors are the new contactless considerations for mobile gadgets by EMVCo, the body supervising card networks, and regulations from PCI Security Standards Council.

Plus, with the realization that dongles can integrate into phones, the next best move is to embed this payment functionality into the iPhone, according to Thad Peterson, a payment expert at Aite Group LLC. Meanwhile, MagicCube Creator & CEO Sam Shawki refers to his company as “a device-replacement firm,” even boasting its i-Accept technologies as “the software replacement of an EMV chip.”

These newly-fangled I-Accept solutions rely on NFC or Near-field communication to link the seller’s mobile device to the shopper’s EMV chip card. They also connect NFC-ready smartphones to a payment wallet and can request customers to enter a PIN just by tapping the card or phone.

Final Words

MagicCube is now central to Visa’s promising Tap to Phone program, which plans to infuse contactless tech on millions of Android gadgets globally. The initiative includes investing in fintech experts and strategic collaborations with merchant acquiring firms.

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