Hip to be square: How to pay with your smartphone

San Francisco – As LS:N Global reported in December, retailers will soon be able to charge for purchases via a new piece of hardware and an iPhone app.

Developed by Jack Dorsey, the creator of Twitter, the Square card reader plugs into the iPhone’s headphone jack and works with an app to enable transactions.

As shown in the video above, the retailer types in the amount, then payment is taken from the consumer’s account digitally. Once the payment has been completed, a receipt is instantly sent to the buyer’s email or text inbox. To ensure security, buyers create a photo-based payer account that allows sellers to visually verify their identity.

Reflecting the increased importance of corporate social responsibility, Square promises to donate a penny from every transaction to charity.

Read our report on Mobile Money for information on other mobile payment options set to affect the wallets of tomorrow.