Amazon undercuts Square with new mobile credit card payments service

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NEW YORK (CNNMoney) — Amazon announced a credit card processing service for small businesses Wednesday, providing competition to mobile payment provider Square.

The Amazon offering, known as Amazon Local Register, is offering a lower rate than Square currently offers to process card payments.

Amazon will charge a promotional rate of 1.75% through the end of next year to customers who sign up through October of this year, and 2.5% for those who sign up after that.

Square, started by Twitter co-founder Jack Dorsey, charges 2.75%. There are also payment services being offered by PayPal unit of eBay as well as by Intuit, maker of the QuickBooks software used by small businesses, but Square is the largest player in the sector.

Amazon said customers’ first $10 in transaction fees will be credited back to them to cover cost of its new card reader.

Amazon has become well known for moving into new segments, disrupting existing business models. It unveiled its own Fire smartphone earlier this summer. It also recently unveiled a music streaming service that provides new competition for Spotify, Pandoara, and the iTunes Radio offering of Apple. It is currently involved in a high profile battle with publishers such as Hachette over the price of e-books.

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