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Fast and inexpensive credit card payments

Imagine simply connecting a small device to a mobile device, swiping a credit card, getting a customer signature, and being paid instantaneously. That is the premise behind SquareUp – a brand new start-up in its beta stages. With all the red tape and jumping through hoops small businesses have to contend with when it comes to accepting credit card payments, the basic idea behind SquareUp is promising.

How does it work? Lucky SquareUp beta testers with iPhones connect a small swiping dongle to the iPhone audio jack. The customer’s credit card is swiped, the customer signs via the touchscreen and enters an e-mail address for receipt purposes. Currently, the passed about word is there are no lengthy contracts or monthly fees – one can only assume there are transaction fees but only beta testers are currently privy to that information.

This new concept is being headed by Twitter co-founder Jack Dorsey and is being funded by numerous angels including Khosla Ventures. Dorsey has indicated that the iPhone is just the first step in integrating with mobile media devices. The Android and Blackberry are the next two devices on the SquareUp path and hopefully followed by many more.

The feedback around the Internet on this new service is a bit mixed. As not a lot of information has been released about the inner workings of SquareUp, much of what can be found is pure speculation. The excitement is most certainly palpable as any inexpensive mode for conducting payment transactions is always a good thing.

However, many are concerned over the security aspect of the service. LiveFyre, a beta service itself, houses an interesting and ongoing discussion on the challenges Internet users feel that may face SquareUp. One user has noted that it may not be too difficult to implement an iPhone-based skimmer – a program that captures bank card information for fraudulent purposes. It has also been noted that as the dongle device connects to the audio jack, two issues may arise – one, many do not want yet another piece of equipment to have to carry around and two, audio jacks are not designed for this type of usage and may end up damaged.

Still, the appeal is there due to what seems to be a lack of ongoing and frankly expensive costs brought about by normal merchant payment gateways. This does not seem like a service for those with numerous daily transactions; freelancers, small businesses and perhaps individuals with the need for a quick way to be paid may be the target market for this service. Until more information is released (which does not look likely until after the beginning of 2010), SquareUp is worth keeping an eye on.

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