New App Has the Potential to Change Credit Card Industry for Small Business Owners

Small businesses that have not been able to accept credit cards because of the expense now have new tool and not surprising it is a smartphone application.

Thanks to a company called Square, a small attachment can turn any iPhone, iPad or Android device into a credit card reader, which business owners can then use to process transactions. The company is creating some major momentum as its attachment is now available through major retailers including, Best Buy, Wal-Mart, RadioShack, Target and Apple stores.

Jack Dorsey, the creator of Twitter and CEO of Square made the announcement on Oct. 24 via his Twitter Account. The attachment plugs into any iPhone, iPad or Android through the earphone jack and with the application it can read the magnetic strip on the back of a credit card and process the transaction. The application can read Visa, MasterCard, American Express and Discover credit cards.

Charles Tran, founder of CreditDonkey, a credit card comparison website, said the new technology will change the landscape for the credit card industry and small businesses. He pointed out that the new app transforms any iPhone into a mobile cash register, which means the possibilities are endless.

“This is another example of how credit cards have become a necessity in our society,” he said. “Small businesses that traditionally don’t accept credit cards like street vendors can now expand their customer base. Imagine buying fresh fruit from at your local farmer’s market using your credit card.”

The reader costs $9.99 and Square charges a fee of 2.57% on all transactions. After reading the credit card, the funds are processed and deposited into the businesses owner’s bank account by the next day. Businesses much register a U.S. bank account to be able to accept the funds process through Square.

According to CNN, Square has expanded rapidly since this summer; the attachment is now available in more than 9,000 stores, which is an increase from just 200 stores a few months ago. The company has shipped about 800,000 units across the country.

Although Square processes credit card transactions, according to their website, as a security feature, they don’t keep credit card information. The company now processes about $2 billion in payments annually.

Follow @CreditDonkey or write to Neils at neils@creditdonkey.com

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