PayPal, an eBay company, announced PayPal Here, a global mobile payments solution that allows small businesses to accept almost any form of payment. The company said that the new service includes a free app and fully encrypted thumb-sized triangular card reader, which turns any iPhone, and soon Android smartphone, into a mobile payment solution.

With PayPal Here, small businesses, service providers and casual sellers can send invoices or accept debit and credit cards, checks and PayPal using one simple product, the company said. PayPal users will be able to use the “Local” feature on the PayPal app to find nearby businesses that accept PayPal Here.

According to the company, PayPal Here gives merchants more choice than any mobile payment solution on the market today. Merchants can accept payments by swiping cards in the card reader, scanning cards and checks using their phone cameras, or manually entering card information into the app. They can also send an invoice and set payment terms directly from the app.

All card swipes and PayPal transactions have the same 2.7% rate with no hidden fees or commitments. Taking checks and issuing invoices are free of charge. You pay 2.70% for swiped transactions and PayPal payments, and 3.5% + $0.15 if you type in the credit card information manually or scan the card using the Scan Card feature.

Square, started in 2009 by Twitter founder Jack Dorsey, is the mobile payments market leader. Square’s card reader, which is square, attaches to the top of iPhones and other mobile devices. It has been a hit among small merchants, such as cab drivers. Visa bought a stake in Square last year. Square charges 2.75% per swipe for Visa, MasterCard, Discover and AmEx. Their Free app and free Square Card Reader requires no merchant account, monthly fees or set-up costs. Manually-entered cards cost 3.5% + 15¢ per transaction.

Square has shipped over 800,000 card readers to merchants and is currently processing over $2 billion in payments annually. While currently focused on its U.S. growth, the company plans to offer Square in international markets in 2012.

The market for mobile card acceptance by small businesses and individual merchants is probably about $4 billion currently, but it is growing fast, Rick Oglesby of Aite Group told the Huffington Post.

Mobile phones equipped with Near Field Communications chips don’t require a card. You just bump your phone on the reader to make a payment. Even tech-savvy individuals don’t make mobile payments using NFC very often.

Isis, a joint mobile payment venture between AT&T, Verizon Wireless, and T-Mobile, might help change that.

Sprint supports competitor Google Wallet on two smartphones: Samsung’s Android-powered Nexus S and Galaxy Nexus, and plans at least 10 Google Wallet-enabled phones for 2012.

Posted by Sam Churchill on Thursday, March 15th, 2012 at 12:15 pm .