Want to accept credit cards at your next garage sale? A new iPhone application will soon make that easier. Twitter cofounder Jack Dorsey has unveiled his latest project, the Square magnetic reader, which plugs into a vendor’s handset, allowing customers to swipe their card. The credit information is then transmitted via an audio signal through included software to Square servers for processing.
Sure to be popular among small-business owners, delivery services, or people who want to collect $20 loaned to a cash-poor friend, Square takes existing mobile credit applications a step further by eliminating the need to manually input long credit-card numbers.
The postage-stamp-sized device, whose name refers both to its shape and the capability to “square up” a transaction, was conceived at the beginning of this year by Dorsey and a friend, Jim McKelvey, according to Square’s web site, Squareup.com.
After losing a sale of his glass art because he couldn’t accept credit cards without a long application and approval process, McKelvey turned to Dorsey and they joined up with Tristan O’Tierney to develop a prototype with an investment estimated at $10 million from Khosla Ventures. Based in Menlo Park, Calif., and founded by Indian capitalist Vinod Khosla, the firm is a major presence in Silicon Valley.
Not unlike Twitter, the project is ambitious and simple but, for now, has no clear business model. Dorsey told the Los Angeles Times he plans to give the units away free to those who sign up for a Square account. At the moment, customers can only request information from Square. It’s unclear if the company would charge a flat fee or collect a percentage of the transaction.
While the unit plugs into any device with an audio jack, including computers, the software is currently only available for iPhones and the…