Square, the company that designed card readers which jack into iPads and iPhones, has designed a new mobile payment system that allows users to make credit card purchases solely using an iPhone app. You don't even have to take out your credit card.
When both a customer and merchant are running the Square app in the same location, the customer's name and photo will show up on the merchant's version of the app. The merchant enters the transaction, it immediately shows up in the customer's version of the app and the billing is done behind the scenes with the credit card data you've previously given Square.
When a customer makes a purchase at a Square merchant, they get emailed or text messaged a receipt that lets them set up a tab. The tab stays in a "card case" on the customer's phone, and from then on you can use it at the store to make a purchase. After you have an account, you can also open the card case to see all the merchants in the area that accept payments.
Right now only 50 merchants around the country are beta testing the software, and customers have reported that it's a little tricky to set up a customer account. "More than $1 billion in purchases have been made using the card readers, so once the app is more widely distributed merchants will be happy using it as opposed to paying high merchant services percentages.
[Source: Gizmodo]