The target market is mostly small businesses, particularly those that are mobile. When they’re reading to ring up a customer, they simply tally up the order in the app–either by selecting items they’ve added to their inventory or simply punching in the full amount–and then select the method of payment. If they opt for a credit card (or presumably debit card too), you use the swiper in the triangle-shaped credit card dongle. The customer adds a tip (if desired) and signs right on the iPhone’s touchscreen. Yes, that means handing over your iPhone to your customer.

The PayPal Here app can also be used to accept payment via cash, check (using the iPhone’s camera), invoice, or PayPal. I imagine they’d have to sign into their PayPal account to get it to work, which could be a little time-consuming. You’ve also run into a snag if someone has a chip and PIN-enabled credit card, since the swiper only seems to work with the standard magnetic stripe.

In any case, the initial rollout is planned for USA, Australia, Hong Kong and Canada. Merchants are charge 2.7% on card swipes and they can get a business debit card with 1% cash back on eligible purchases. The little dongle, which simply plugs into the headphone jack on your iPhone, is free upon request.

[Source]

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Square Credit Card processing gadget plugs in to the headphone jack

When you buy something from the Apple Store, the employee can happily take your credit card right next to the iPods and MacBooks on display. When you turn around to sell your old iPod on Craigslist, you can do the same thing using the Square app.  That’s right, the Square App is publicly available for the Apple iPhone, as well as with Android-based smartphones. Further still, they’ll gladly ship out a card reader so that you can start taking Visas and Mastercards with the best of them.

The app is mostly geared towards retailers, of course, but there really is nothing stopping an average Joe from taking this route too. The card reader (a small cube) attaches to the headphone jack of your iPhone, iPod touch, iPad, or Android device. You swipe the card, the customer signs his or her name, and it’s done. There’s even an option to add a tip. A receipt is sent immediately via SMS or email.

This sounds incredibly convenient for all parties involved. Unlike traditional credit card merchant setups, the fees are settled at the end of each night rather than once a month. I don’t see a specific mention of the fees, but I’d imagine they’d be similar to a traditional merchant configuration.

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