The proliferation of credit cards as a payment method preferred by millions of consumers has led to the co-founder of Twitter, Jack Dorsey, creating Square – a credit card reader device that makes any mobile phone a cash register. Retailers can hook up the credit card reader to any device with an audio input jack, including a mobile phone. And consumers never have to worry about carrying cash again (well, almost).

The impetus for Square was an encounter Jim McKelvey (now a member of the Square team) had in February 2009 when he wasn’t able to sell his artwork because he couldn’t accept a credit card as payment. Now that has changed with Square.

Swipe and pay

The device plugs into the audio input jack and immediately is ready to start taking payments, much easier and simpler than many other current methods, says Square. The system has an easy and intuitive interface and there are no contracts, monthly fees, or hidden costs (though no details of upfront costs just yet).

Retailers have the ability to create a Square payer account to speed up and secure every payment. For instance, on an iPhone payers can be linked with photo verification which lets retailers identify that the consumer is, indeed, the card holder. There’s also an opportunity for card holders who still prefer to sign for their payments, to do so on-screen.

Square says that it will let retailers know when you’re a repeat customer to get “frequent flier” status and credits.

As a payer, get your receipts sent to your email or mobile phone instantly and access them securely online. You can also use a text message to authorize every payment in real-time.

And Square claims it will donate a penny of every transaction to a cause of your choosing.

Currently, a limited beta version is being tested in the marketplace and rolling out is expected to everyone in early 2010. And, we assume, pricing details will be provided then, too.