While it doesn't sound like anything groundbreaking, Dorsey's new company Square is developing a tiny white cube (see photo above) that plugs into the headphone jack on either an iPhone or iPod touch. The cube is a credit card reader, something missing from all of those credit card apps currently in the iTunes App Store.
The Square iPhone Payment System consists of the reader and an app. After a card swipe, the customer uses a finger to sign the iPod touch or iPhone, one of the participants in the transaction enters the customer's email address, and a receipt with the location of the transaction, the signature, and other standard information is emailed to the customer.
While most online journalists are anticipating that this device and software are going to be used in retail (can you say Apple Store?), I think Dorsey has bigger ideas - let's face it, the guy doesn't think small. So why not make it possible for anyone with an iPhone or iPod touch to be able to accept credit cards for payments? Word has it that the card reader's manufacturing price will be as low as US$0.40, which means that Square could give away the readers and still make money on the transaction fees.