Dutch chip maker, NXP, will supply Apply with near field communication (NFC) technology that could enable smartphone payments in the next iPhone, according to the FT.
The partnership means phone users will be able to conduct transactions by tapping the device on payment terminals, as well as paving the way for other 'internet of things' applications, the sources said.
Despite a number of smartphone vendors including NFC chips in their handsets, such as Apple's main rival Samsung, the market for mobile payments is yet to take off in a significant way.
Apple, which is preparing to launch the latest version of its phone in September, is considered to be in a good position to drive adoption of mobile payments.
It already holds card details for 800 million customer details through iTunes and the App Store, and is believed to be developing its capabilities to handle payments for physical goods.
Apple CEO Tim Cook said earlier this year that mobile payments could be the next "big thing" for the firm, with reports that the company is working on a service to rival Google Wallet and PayPal.
In the UK there have been recent moves to drive adoption of NFC smartphone payments, using the 300,000 terminals currently available in retail stores for transactions via contactless credit and debit cards.
Weve, a joint venture between three of the UK's largest mobile operators, Vodafone, EE and O2, hopes to popularise mobile payments when it launches fully next year.
Upgrades to the London Underground terminals could, in theory, also allow commuters to swap their Oyster card for mobile devices when contactless payments go live in September.