There's lots of coverage of the launch of Square. The company basically offers merchant-account free credit card acceptance or P2P payments (via mobile device; iPhone now more platforms later). It reads card via a small plug-in device (magnetic strip reader) on the handset. There's also an interesting built-in loyalty "infrastructure" for SMBs to reward or "incentivize" consumers.

Here's the background:

In February 2009, Jim McKelvey wasn’t able to sell a piece of his glass art because he couldn’t accept a credit card as payment. Even though a majority of payments has moved to plastic cards, accepting payments from cards is still difficult, requiring long applications, expensive hardware, and an overly complex experience. Square was born a few days later right next to the old San Francisco US Mint.

Today the Square team is focused on bringing immediacy, transparency, and approachability to the world of payments: an inherently social interaction each of us participates in daily. We’re starting with a limited beta and rolling out to everyone in early 2010.

There are a range of companies working on what might be loosely called "mobile payments." But what's most interesting to me is the way in which Square enables people to accept credit card payments without a merchant account and related fees. Zong Plus and Bling Nation do this too but Zong for example takes a pretty big slice of the value of the transaction.

It's not clear what the Square-fee would be. However I would imagine that the company is banking on subscription revenues or a much smaller per transaction fee than current vendors and card companies. 

Square's success isn't guaranteed by any means but Square and its direct and indirect competitors represent an opening up of the payments infrastructure and potential disruption of the stakeholders in the segment. At the low end and among truly small merchants and sole proprietors these services will widen the use of credit card acceptance, as well as among those who simply object to the charges levied by the card issuers.