Apple has announced plans to allow third parties to utilize the iPhone’s payment chip, a significant shift that will enable banks and other services to compete with its Apple Pay platform.
This change, driven by regulatory pressures from the European Union, will take effect with the release of iOS 18.1, the upcoming software update for iPhones.
The iPhone’s NFC (near-field communication) chip, which facilitates contactless transactions, will now be accessible to external developers.
This integration will support a variety of uses beyond Apple Pay, including in-store payments, transit fares, work and home keys, and reward cards. Government identification cards will be supported in the future.
Users will also have the option to set a third-party payment app as their default, replacing Apple Pay. Despite this move, Apple will continue to impose “associated fees” on developers and require them to enter into a “commercial agreement.”
Only developers who meet Apple’s security, privacy, and regulatory standards can use the NFC technology.
Apple had previously been hesitant to open up the chip, citing concerns about security and the potential loss of revenue from Apple Pay transactions, from which It currently earns a cut.
The new program will initially roll out in Australia, Brazil, Canada, Japan, New Zealand, the United States, and the United Kingdom.
Notably, the European Union, which has been a major advocate for such changes, was not specifically mentioned in the initial rollout plans, and South Africa was also not included in the announcement.
