Block changed its name from Square late last year, but kept the Square moniker for its merchants services unit. The company has increasingly focused on attracting small businesses. In March 2021, the company created its industrial bank, enabling the fintech firm to lend to small businesses directly instead of relying on its former partner Celtic Bank. It later launched small business checking and savings accounts.

In August 2021, Square bought now-pay later provider Afterpay for $29 billion with plans to integrate its installment payment services into its Square seller and financial services Cash App operations. Besides capitalizing on the growing BNPL trend, the Afterpay acquisition could enhance Square’s appeal to small businesses looking to improve their cash flow. 

In its announcement this week, the company said its partnership with Apple aims to provide more modern payment tools to a larger pool of merchants.

“Square’s purpose is rooted in economic empowerment, which is why we’ve always offered a free way for businesses to get started using our services,” David Talach, head of financial services at Square, said in the release. Bringing the iPhone tap-to-pay tool "into the Square ecosystem ensures that new sellers will have another free option to get up and running, while providing businesses of any complexity with more flexibility to adapt their commerce experiences to evolving consumer preferences and changing industry trends.”

The partnership with Apple comes as fintech companies face financial pressure. Block’s Q1 2022 earnings show that its total net revenue dropped to $3.9 billion, down from $5 billion in Q1 2021.

Other payment firms like Klarna, PayPal and Bolt have reduced their workforce and restructured their operations in response to inflation, climbing interest rates and capital concerns. 

Meanwhile, Apple has focused on payments as a source of revenue growth, placing it in direct competition with Block and other fintech firms. The collaboration between the two companies follows Apple’s roll-out of the tap-to-pay iPhone tool with the fintech Stripe earlier this year.