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Beyond Square: Taking Credit Cards with Your Smartphone

Ellen Cunningham
Ellen Cunningham

By now, most people are familiar with Square, the company behind the small white credit card reader that plugs into smartphones and tablets through a headphone jack.

But did you know there are lots of other options that do the same thing, sometimes for less money?

If you regularly need to take payments on the go, it’s worth your time to look into all the options before choosing your service.

Related Article: Seeing Green: 7 Payment Processing Solutions for Small Businesses

Smartphone Processing Basics

Taking credit cards using your smartphone requires, at a minimum, a payment application and an account with a processing company. Credit card readers are actually optional for smartphone processing, but using one may keep your costs down.

These days, almost all processing companies can offer mobile processing. You’ll be able to use the processor’s payment app to securely take credit cards without special equipment.

Card Readers

There are lots of options when it comes to credit card readers for smartphones. Most commonly, the reader connects to your phone using the headphone jack, but Bluetooth models are also available. Other options offer a full PIN pad if you accept (or want to accept) debit cards.

Readers almost always accept magnetic stripe cards, but some of the newer ones let you take chip credit cards and/or contactless payments like Apple Pay as well.

Chip Cards and Smartphone Processing

It’s important to note that the October 2015 chip card liability shift does apply to businesses that take credit cards with a mobile phone. If you accept a chip card but run it as a magnetic strip card because you don’t have a chip-capable reader, you’re liable if there’s fraud.

If you’re new to smartphone processing and haven’t purchased a reader yet, it’s worth the money to get a chip-capable reader from the start. If you already have a magstripe reader, you may want to consider upgrading.

Choosing a Reader

Some card readers are universal, and will work with many different smartphones and payment apps. Ingenico, Verifone, ePN, and AnywhereCommerce provide readers that work with multiple processors, and the variety of models ensures that you can pick what will work for you.

With so many choices on the market, an independent smartphone card reader directory can provide helpful information when researching readers.

Other readers are proprietary, meaning they can only work with the company who offers it. Square’s readers are proprietary, as are the readers available from competitors FreshBooks, PayPal and Intuit.

Credit card readers are less expensive than other types of processing equipment, but you should still consider whether it will be a burden to purchase a new reader if you decide to switch processors. If the answer is yes, you’ll likely want to choose a universal reader instead of a proprietary one.


Of course, a major factor for small businesses is cost. Credit card readers have two costs associated: the cost of the reader itself, and the cost to actually accept cards.


The actual readers are generally not very expensive. Some are offered free of charge by processors, while ones that have to be purchased are often around $50. Models with more features (like PIN pads and contactless capabilities) are more expensive, but almost all readers are under $150.


Costs for processing transactions through a smartphone work the same as transactions processed in-store. Processors commonly charge using a flat rate model, a tiered model, or an interchange plus model.

Flat Rate

Flat rate pricing is what Square and similar companies like FreshBooks and PayPal offer. With flat rate pricing, your costs stay the same no matter what kind of card is used. Flat rate smartphone processing can be a great option for a specific set of circumstances. It might be right for you if:

  • Your average transaction is approximately $10 or less
  • You process less than approximately $3,000/month in credit cards

If neither of those criteria applies, you can likely save money by choosing a non-flat rate smartphone processing solution. Flat rate processing looks simple, but simplicity shouldn’t be confused for a low cost.

Options for flat rate smartphone processing:

  • Square
  • PayPal Here
  • FreshBooks Mobile
  • Intuit GoPayment


Tiered pricing is an opaque and often expensive option. Processors that use tiered pricing will quote “qualified” rates for transactions, and may charge you more for any transaction that they decide doesn’t qualify. It’s in your best interest to avoid any processor using tiered pricing.

Interchange Plus

Interchange plus pricing is the most transparent model. A processor that uses interchange plus pricing will pass the wholesale cost of processing to you, and charge a small markup separately. If you don’t fit the criteria for businesses that will benefit from flat rate processing, you should consider an interchange plus option.

Many processors can offer interchange plus pricing, so you can get the best of both worlds: low-cost processing, and universal card readers that you can take with you even if you switch processors in the future. To find a processor that offers interchange plus, you can use a comparison service. Searching online for a credit card processing comparison site will give you options for free tools to assist you.

Options for interchange plus smartphone processing:

  • Clover Go
  • ePN Mobile
  • AnywhereCommerce
  • Ingenico
  • Verifone/PAYWare
  • TSYS MobilePASS

Related Article: The Truth About Free Credit Card Processing

Note that these smartphone options could also be offered by a tiered pricing processor, so be sure to choose a processor who offers interchange plus before purchasing the card reader.


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Image Credit: DERO2084 / Getty Images
Ellen Cunningham
Ellen Cunningham Member
Ellen Cunningham is a writer first and foremost. She loves the challenge of turning dry, complex topics into readable articles, which makes her a perfect fit for the credit card processing industry. She is the Marketing Manager for CardFellow, the leading resource for businesses seeking the right credit card processing solution. Ellen enjoys helping people understand their options for taking cards so that they can make informed decisions. When she's not writing about credit card processing, she can be found cycling beautiful trails in New England or hanging upside down in trapeze class.