No Hardware, No Hassle: How Smartphones Are Powering the Next Wave of Small Business
For small businesses, navigating the set-up of payment acceptance can be confusing and expensive, often requiring significant upfront costs to set up a website, checkout, and POS terminal. However, merchants can now do all these things with just a phone, making it easier and more affordable to start and run a business.
Payments innovations have transformed the process of setting up a business, reducing the level of capital entrepreneurs need to invest to start accepting payments. One way this is happening is through the eradication of the need to buy POS terminals and associated hardware. While these remain relatively cheap, the upfront cost or monthly subscription can still be out of reach for those with smaller, more sporadic use cases, including garage sales and social media marketplace transactions.
With Apple's Tap to Pay on iPhone and Stripe's Tap to Pay on Android, everyday merchants can sign up with a payments platform and download an app which enables them to accept payments directly from their phone, with the cost generally being included as part of the percentage fee that payments platforms take from each transaction. Tap to Pay capabilities allow merchants to accept contactless credit and debit cards and digital wallets by using an app to unlock NFC capabilities on the phone. This feature was released by Apple in February 2022 for the US, July 2023 for the UK, and then rolled out for other countries such as Australia, Brazil, France, and Japan. As seen in the figure below, the adoption rate of phones using soft POS devices are expected to be high, growing by almost 490% between 2024 and 2028.
Global Number of Contactless-enabled Smartphones Using Soft POS (m)

Source: Juniper Research
Small Businesses: Social Commerce and eCommerce
This low-effort set-up for in-person sales mirrors innovations within eCommerce payments which allow merchants to start selling online from scratch with no upfront costs. For example, payment processing providers often provide end-to-end services, supporting the whole process of online sales from hosting a checkout to accepting payments and providing visuals of cash flow. Merchants can set up and view these processes from an app on their phone, with no code necessary to develop and integrate these features into their sales cycle.
The playing field between large enterprises and smaller businesses has been further levelled through large commerce platforms such as Shopify providing small eCommerce businesses with features that would be difficult for them to develop themselves. For example, advanced payment technologies such as smart fraud protection and localised checkouts are typically costly and complex to integrate separately. However, the rise of the Payments-as-a-Service model allows small businesses to access and benefit from these technologies through a single integration, enabling them to compete more effectively.
The rise of social commerce - sales channels located within social media profiles - now means that entrepreneurs do not even need to launch a website to be successful sellers. Instead, they can embed payment links directly in their Instagram posts or TikTok videos, allowing buyers to purchase items without leaving the platform. This is likely to benefit small sellers over large ones, as the social nature of these sites means that individual influencers have the advantage over brand accounts.
The Future of NFC Payments
An extension of the Tap to Pay feature has been announced by Apple at WWDC 2024. As part of their iOS 18 updates, a ‘Tap to Cash’ feature will be released to let users pay for things by tapping two iPhones together, utilising the NFC functionality so money can be transferred without any personal details such as a phone number being shared.

Source: Apple
This update, expected to be released in Autumn 2024, reflects the demand for seamless, fast transactions in the payment market, as the Tap to Cash functionality skips the usual steps of selecting a contact and initiating payment manually when sending a P2P (Person-to-Person) payment. As with other P2P payments, there will likely be some use by small merchants instead of using formal merchant payment methods.
This use of NFC functionality is not restricted to phones and payments; as a replacement for business cards, Gen Z entrepreneurs are sticking NFC tags to their nails, laminating them with polish, and programming them to their website. These open to their eCommerce shop when tapped to a phone, providing them with a true omnichannel method to reach customers and reflecting how NFC technology can enhance every aspect of the sales cycle.
With Tap to Pay and the rising power of social commerce turning phones into powerful sales tools, starting and running a small business has never been easier. These low barriers to entry are unlocking digital transformation for even the smallest merchants, and will accelerate the transition away from cash in many markets.
Lorien is a Research Analyst in the Fintech and Payments team at Juniper Research, and specialises in analysing and forecasting emerging trends and innovations in financial markets. Her latest reports have covered topics including Subscription Economy and Modern Card Issuing Platforms.
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