A new iPhone accessory called Square allows users to swipe credit cards through a mini magstripe reader attached to the phone’s headphone jack.  The prototype technology is currently being tested at the Self Edge clothing store in New York and will likely go on sale as more small trendy shops express interest.

The simple application and reader allows employees to enter the amount of the purchase and immediately email the receipt to the customer, complete with geo-tagged information and the signature they managed to scrawl with their finger.  Square takes an unknown percentage of the payment and a fixed fee before transferring payment directly into the seller’s bank account.  While the application and iPhone accessory are wonderfully simple, we worry about the possibilities for fraud and abuse.

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