Apple could soon let iPhones accept contactless payments DIRECTLY without the need for any extra hardware, report claims 

• Apple tipster reveals the firm's plans to eliminate hardware for small businesses
• The feature would allow two iPhones to come together to perform a transaction
• The feature may even roll out through a software update in the coming months

Apple could let iPhones accept contactless payments directly without the need for any extra hardware 'in the coming months', a new report claims. 

It would mean customers could tap their iPhone or debit card on the back of a retailer's iPhone to pay at coffee shops, hairdressers, food trucks and more.

Currently, small businesses require external terminals for the customer to tap their phone or card against, such as Block Inc's small white 'Square' device. 

Apple's new system will likely use iPhone's near field communications (NFC) chip that is currently used for Apple Pay, the report said. 

The feature may even roll out through a software update in the coming months, potentially accessible through Apple Pay. 

The news comes from Apple tipster Mark Gurman writing for Bloomberg on Wednesday, citing people with knowledge of the matter.

Other recent Gurman predictions include a rugged version of the Apple Watch, an iPad with a screen the size of a car wheel, and a 'complete redesign' for the iPhone 14.  

'The system will likely use the iPhone's near field communications, or NFC, chip that is currently used for Apple Pay,' he says. 

'Devices currently require external terminals such as Square's.' 

Apple declined to comment on the new report when contacted by Reuters. 

Apple has been working on the new feature since around 2020, the report said, when it paid about $100 million for Mobeewave, a Canadian startup that developed technology for smartphones to accept payments with the tap of a credit card.

In order to accept payments on an iPhone today, merchants need to use payment terminals that plug in or communicate with the phone via Bluetooth.

But the new feature would eliminate the need for these payment terminals completely, allowing two iPhones to come together to perform a transaction. 

However, it is still not entirely clear if the payment acceptance option will be branded as part of Apple Pay and accessible within the Apple Pay app.

An alternate option would be Apple partnering with an existing payment network so the feature would be accessible on multiple apps. 

As Gurman explains, the decision could affect market leader Block Inc – a company co-founded by Twitter founder Jack Dorsey – and its Square Reader. 

'If Apple lets any app use the new technology, then Square can continue accepting payments via Apple devices without needing to worry about providing its own hardware,' Gurman said.

'If Apple requires merchants to use Apple Pay or its own payment processing system, that could compete directly with Square.'       

Apple Pay initially launched in the US in October 2014 before launching in July the following year.

The wallet can be used to make a contactless payment in a shop, on public transport, in an app or through an online store.