Square's New Credit Card Reader Rolling Out to Merchants

Square launched its latest card readers, which work with Apple Pay and accept security chip-embedded credit cards.

Square, card readers, Payment card industry, payment systems, Apple Pay, Android Pay, Chase Pay, Samsung pay, LG Pay, chip cards, NFC payments, swiping

Square's latest credit card readers that read chip cards and accept payments from Apple Pay are starting to be distributed, beginning with about 100 local small businesses across the United States.

Square announced the release of the new $49 card readers on Nov. 23. The devices, which Square unveiled in June, can read the chip on a chip-equipped card or be tapped using near-field communication (NFC), while accepting payments through Apple Pay, Android Pay and other payment services. A free Square magnetic stripe reader is also included so merchants can still accept and swipe older credit cards.

The company started the distribution of the new readers to smaller businesses so they can gain the ability to accept such payments with the same ease as larger stores, according to Square. The first businesses to get Square's new reader include Honey Butter Fried Chicken in Chicago, Philz Coffee in San Francisco, Sump Coffee in St. Louis, Cafe Grumpy in New York City and the 20-plus merchants in the Urbanspace Vanderbilt food hall in New York City, according to Square.

Small local merchants in Atlanta; Austin, Texas; Boston; Denver; Los Angeles; Nashville; New Orleans; Miami; Minneapolis; Philadelphia; Phoenix; Sacramento; Santa Cruz; Calif.; Seattle; Tampa, Fla.; and Washington, D.C., are also among the first to get the latest devices.

The wireless and rechargeable reader, which retails for $49, connects with a Square Stand or a mobile device and works with Square's free point-of-sale app. To complete a purchase, customers hold their mobile devices near the readers or insert their chip cards, and then they can initiate their payments. If a customer is using a recent iPhone, the Touch ID fingerprint technology can be used to make a purchase without a signature. The new reader is available for preorders immediately.

"Our customers have been asking about contactless payments," Caroline Bell, owner of Cafe Grumpy in New York City, said in a statement. "Now it's here—with one tap, customers at our Grand Central location can grab a coffee right before they jump on the train."

The reader connects wirelessly to iOS or Android mobile devices. The reader works with Apple iPhone 4S and later models, third-generation and later iPads, fifth-generation and later iPod Touch devices, and an assortment of recent Android devices from Asus, HTC, LG, Motorola, Samsung, Sony and more as shown in the company's compatibility list. Square is continuing to add devices to work with the reader.

The device can be used for transactions with Visa, MasterCard, Discover or American Express cards.

Embedded chip credit cards are the latest cards being issued by credit card companies, and they require special readers that allow the cards to be inserted and authenticated.

Merchants pay fees that start at 2.75 percent when a customer uses a credit card or mobile payment system. Payments to merchants are processed within two business days, and there are no monthly fees or long-term commitments, according to Square.

Square was founded in 2009 as a technology that would make it easier for small businesses without traditional point-of-sale systems to take credit card payments. The company went public on Nov. 19. The company brought in revenue of $892.8 million for the first nine months of 2015, a 49 percent gain year-over-year, but it lost $131.5 million during the first nine months of the year.

Since Square entered the payments marketplace, it has gained plenty of competition.

Earlier in November, LG Electronics announced that it is working to create its own payment service to take on similar services, including Apple Pay, Android Pay, Chase Pay and Samsung Pay. LG is developing its system with the two largest credit card companies in South Korea, Shinhan Card Co. Ltd. and KB Kookmin Card Co. Ltd. No date has been set for when the new mobile payments services will be available. The LG Pay service will be designed to work on all LG smartphones.

In October, JP Morgan Chase jumped into the expanding mobile payments marketplace with a planned Chase Pay service that will launch in mid-2016 and take on products from established competitors, such as Apple, Google and Samsung. The Chase Pay service will allow customers to pay for goods and services in-store, in mobile apps or for online purchases at retailers, including Walmart, Target, Best Buy and Shell.

The Samsung Pay mobile payment service, which the company launched in the United States on Sept. 28, allows users to pay for purchases using their Samsung smartphones in just about every retail location through its acceptance of multiple payment systems, from NFC to traditional credit card readers and swiping terminals.

Apple Pay, which has been available since October 2014, lets Apple users make purchases and payments using their late-model iPhones, iPads or Apple Watch devices.