(Reuters) -Apple Inc is planning a new service that will allow small businesses to accept payments directly on their iPhones without any extra hardware such as Square’s payment terminals, Bloomberg News reported on Wednesday.

Currently, retailers can accept payments on an iPhone by using payment terminals connected to their iOS devices through Bluetooth, a method used by Block Inc’s Square payment systems.

Shares of Block fell 3.5% to $107.01 in early trading.

The new feature turns the iPhone itself into a payment terminal and will let merchants accept payments with the tap of a credit card or another iPhone onto the back of their device, Bloomberg reported, citing people with knowledge of the matter.

Apple declined to comment on the report.

If the iPhone maker keeps this service exclusive to its own apps or payment processing system, it would bypass Square’s services that are used widely by small businesses to accept payments. It could also affect other point-of-sale machine makers such as Verifone and Ingenico.

Apple has been working on the new feature since around 2020, the report https://bloom.bg/3u9lssh 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.

The system will likely use the iPhone’s near field communications chip currently used for Apple Pay, the report said, adding that the feature may roll out through a software update in the coming months.

The company has been beefing up its fintech services. It launched its own credit card https://www.goldmansachs.com/our-firm/history/moments/2019-apple-card.html with Goldman Sachs in 2019 and is reportedly working on a “buy, pay later” service https://www.reuters.com/technology/apple-goldman-sachs-planning-buy-now-pay-later-service-bloomberg-news-2021-07-13.

(Reporting by Akriti Sharma and Chavi Mehta in Bengaluru; Editing by Shailesh Kuber and Ramakrishnan M.)