TD Bank Deploys Apple’s Tap to Pay with iPhone to Grow Its SMB Lineup

Who needs a dongle, payment terminal or a smart cash register when an iPhone can handle transactions in store or in the field? TD Bank joins the growing ranks of providers offering phone-based platforms for contactless payments.

TD Bank has become the latest of a small but growing cadre of banks and payments processors that are making “Tap to Pay with iPhone” capability available to small and micro-sized businesses in the U.S.

Tap to Pay with iPhone, created by Apple, can be accessed through apps developed by individual banks and payments processors. The service enables merchants to accept digital wallets, contactless cards, and payments-enabled wearables using an iPhone, with no attachment or reader required and acting in place of a dedicated payments terminal.

Tap to Pay with iPhone, by definition, can only be accessed with a recent iPhone, but it permits acceptance of payments from Android and other devices. Data is transmitted and received using the merchant iPhone’s near-field communication (NFC) chip. Apple introduced the function in early 2022, with Stripe becoming the first payments platform company to make the capability available to merchants in the U.S.

J.P. Morgan Payments became the first major U.S. bank to make the function available to merchant clients in August 2023. The bank’s first client to use it was the Sephora fashion chain, which rolled out the devices so its in-store beauty advisors could accept payments from their customers while consulting, instead of sending them to a checkout line. Among other payments providers offering Tap to Pay on iPhone in the U.S. are Square, Clover from Fiserv, Adyen, and Zettle by PayPal as well as Venmo business users. Two community banks — Five Star Bank and nbkc bank — working with Autobooks, the company that helped TD Bank adopt Tap to Pay with iPhone, announced the service in June 2023.

TD Bank’s National Rollout Targets Small and Micro Businesses

Around 85% of U.S. small businesses are owner-operated firms, according to Jo Jagadish, head of corporate products & services at TD Bank. Many of them are the sole or principal staff, and finding a simple way to take payments in the moment when they are with customers is a key need.

“This space has been ripe for disruption from a capability and innovation standpoint,” says Jagadish. She says that the tap to pay capability hooks directly into the TD Bank small business banking app.

The bank has been developing ancillary functions to make the app the financial centerpiece for small businesses. Another example is the ability to set up and send invoices from within the app. (The vendor facilitating the invoicing and tap to pay is also Autobooks.) The bank has also adopted Zelle’s business service, which enables transmission and acceptance of digital payments.

TD Bank Apple Tap To Pay on iPhone

“Tap to Pay with iPhone is one step in a continuum of capabilities,” says Jagadish. “This solution is really geared towards micro merchants.” This could include small efforts like landscapers, contractors and photographers, for example.

As small firms become larger and have broader needs, other options can be made available, such as merchant payment terminals, says Jagadish. In addition, a business can blend capabilities, using payments terminals at checkout or in store while also using the iPhone option for accepting payments on the move inside or outside a store or head office.

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How TD Tap to Pay with iPhone Works

To accept payments, the merchant opens the TD Bank mobile business banking app and then finds the payments page, to present it to the customer. The customer waves their own phone, card or wearable over the merchant’s iPhone. Once the payment is accepted, the merchant can send a digital receipt to the purchaser.

The receipt serves not just as acknowledgement of the charge, but also confirmation that the payment has gone through proper channels. Jagadish says the ability to tap to pay with two devices involved can lend more confidence and assurance of privacy to the transaction versus anything that would required manual entry of data. She adds that since the pandemic acceptance of tap to pay keeps growing. Indeed, recent consumer research conducted for TD Bank indicates that more than a third of micro-business merchants surveyed have had customer friction when they haven’t had the means to accept contactless payments.

Jagadish says there is no fee for having the bank’s service on the merchant’s device. TD’s fee to the merchant for accepting a payment on the iPhone is 2.75% of the charge. She says that’s a standard price point for payments processing for smaller merchants.

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