FIRST-MOVER

Apple Pay’s new partner has one big advantage over Square

Obsession
Future of Finance
Obsession
Future of Finance

Apple announced a new partnership last week with PayAnywhere for a new device that helps merchants accept Apple Pay transactions.

It looks to be a nice product that will help Apple Pay make inroads with smaller businesses. It will be available starting this month for $39 exclusively at Apple Stores—quite a coup for a payments company with 400 employees.

But what’s particularly notable is that the device is rolling out ahead of a similar product from the much bigger and higher profile Square. That device was announced in June at Apple’s annual WorldWide Developer Conference (WWDC).

Working with multiple vendors in a market like mobile payments is a good practice on a basic level for Apple, according to Jordan McKee of 451 Research. “Change in this industry has been happening on a regular basis, so it makes sense to diversify as much as possible,” he said.

But the linkup between Apple and PayAnywhere may be saying something else.

“Speed to market is a tremendous advantage,” McKee said. “Square has been talking about their support for Apple Pay for a while now, but that hasn’t manifested in a product on the market yet. It makes a lot of sense to back a player that has a product already on the market [like PayAnywhere]. Apple’s trying to rapidly build an acceptance network for Apple Pay, and PayAnywhere can do that, much faster than Square’s been able to.”

Apple’s head of Apple Pay, Jennifer Bailey, told TechCrunch that’s what made PayAnywhere an appealing partner. “We were working with companies to see who can bring an Apple Pay-compatible reader to market first. [PayAnywhere] jumped on the bandwagon and they’re very innovative, they’re fast moving and they were able to develop this great product.”

Square announced a terminal last September that allows merchants to accept almost any kind of payment, from traditional payment methods like mag-stripe and chip cards to newer forms like contactless mobile wallets. The terminal made its public debut at WWDC, and a Square spokesperson told Quartz that the new readers will start shipping “in the fall.” All told, that’s a pretty long lead time.

There are differences between Square’s device and PayAnywhere’s. Square’s terminal, which will sell at Apple Stores for $49, is a more complete device, and the contactless reader wirelessly links to a nearby base, so the customer will be in control of their device and chip cards during the transaction, unlike with the PayAnywhere device. That’s actually a bigger deal than it seems—customers are insecure about handing over their cards and devices to retailers. In addition, Square is heavily subsidizing the terminals for merchants, giving away 250,000 for free (almost as many as PayAnywhere’s customer base). For its part, PayAnywhere will waive its fee on the first $5,000 in transactions.

While Square’s new terminal has some beneficial features, its relatively slow release appears to have opened a hole to competitors. By pushing out a product quickly that lives up to Apple’s notoriously high standards, PayAnywhere has a chance to step through it.

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