Amazon.com Inc. (NASDAQ:AMZN) is offering a mobile credit card reader that will compete with existing services from San Francisco-based startup Square Inc. and eBay Inc.’s (NASDAQ:EBAY) PayPal Here. Amazon announced its own credit card reader on Wednesday that works by plugging into a smartphone or tablet’s headphone jack.
Amazon is doing what it does best with Local Register -- undercutting established businesses in the same market to gain traction. Amazon is charging $10 for the card reader, and then crediting the same amount in processing fees. Amazon will also charge a lower introductory fee for small businesses that sign up before Oct. 31 -- 1.75 percent of a total transaction until the end of 2015.
While Square charges 2.75 percent for its similar service, and PayPal 2.7 percent, Amazon will only charge 2.5 percent for Local Register following its introductory period. Amazon’s card reader works with the company’s Kindle Fire line of devices, as well as those running iOS and Android.
Amazon’s latest service puts the heat on CEO Jack Dorsey’s Square, which already faces a number of problems. The payment processing startup is rumored to be in buyout talks with larger corporations like Google Inc. (NASDAQ:GOOGL), which it denied in May. Square has canceled plans for a credit card and is also rumored to be operating at a loss.