Amazon is taking on Square and PayPal with a new credit card reader

Amazon on Wednesday unveiled a new mobile-payment service that could bring the online retail giant into local businesses and threaten rival companies like Square and eBay’s PayPal. Amazon Local Register would allow local businesses to accept credit and debit card transactions from a smartphone or tablet. It requires users to download a new mobile app and attach an Amazon-provided card reader to their mobile device. Square and PayPal provide similar services.

The latest entrant into the already crowded field of mobile payment systems comes at a competitive discount Online retail giant Amazon took a swipe at credit card processing services Wednesday with the debut of its latest service: a credit and debit card reader which plugs into a phone or a tablet, providing brick-and-mortar stores with a mobile payment system similar to the ones already being offered by companies like Square and PayPal. Amazon’s offering, however, comes at a steep discount compared to those now rival services. Retailers that start using Amazon’s card reader, called “Amazon Local Register,” before October 31 will pay a rate of 1.75% on transactions, versus 2.75% for Square and 2.7% for PayPal. At the close of the promotional window, the rate rises to 2.5%, still a bit lower than comparable offerings.