Sources at Apple have told Bloomberg that the iPhone and iOS will shortly enable payment systems using just the NFC chip in the phone. Note that this is a commercial thing, think market traders, small shops, and so on. But currently you have to have a third party accessory (e.g. Square) to accept 'tap to pay' and this should be a thing of the past within the next year, the article says.

Update: this is now official.

From Bloomberg:

Apple Inc. is planning a new service that will let small businesses accept payments directly on their iPhones without any extra hardware, according to people with knowledge of the matter.

The company has been working on the new feature since around 2020, when it paid about $100 million for a Canadian startup called Mobeewave that developed technology for smartphones to accept payments with the tap of a credit card. The system will likely use the iPhone’s near field communications, or NFC, chip that is currently used for Apple Pay.

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. The upcoming feature will instead turn the iPhone into a payment terminal, letting users such as food trucks and hair stylists accept payments with the tap of a credit card or another iPhone onto the back of their device...

...It’s unclear whether the payment acceptance option will be branded as part of Apple Pay, though the team working on the feature has been working within Apple’s payments division since being brought over from Mobeewave, the people said. It’s also not known if Apple intends to partner with an existing payment network for the feature or launch it alone.  

Apple may begin rolling out the feature via a software update in the coming months, the people said. The company is expected to release the first beta version of iOS 15.4 in the near future, which is likely to see a final release for consumers as early as the spring. An Apple spokeswoman declined to comment. 

Good stuff, I've been wondering why this wasn't possible for years and clearly it is indeed just a matter of software, i.e. bits and bytes, rather than a hardware limitation. The existing Square (accessory) solution is something I've seen many times in market squares in the UK, but missing out the middle man, as it were, would help the small trader. And Apple itself, of course!

Update: the Apple web site confirms this now:

Apple today announced plans to introduce Tap to Pay on iPhone. The new capability will empower millions of merchants across the US, from small businesses to large retailers, to use their iPhone to seamlessly and securely accept Apple Pay, contactless credit and debit cards, and other digital wallets through a simple tap to their iPhone — no additional hardware or payment terminal needed. Tap to Pay on iPhone will be available for payment platforms and app developers to integrate into their iOS apps and offer as a payment option to their business customers. Stripe will be the first payment platform to offer Tap to Pay on iPhone to their business customers, including the Shopify Point of Sale app this spring. Additional payment platforms and apps will follow later this year.