VeriFone Punches Square, Launches iPhone-based Card Reader

Ever since I wrote about Square, the new electronic payments startup co-founded by Twitter inventor Jack Dorsey, I’ve been getting calls from folks expressing a wide range of opinions as to the likely success (or failure) of the young company. In my post I singled out VeriFone and Symbol Technologies as two companies that will be especially disrupted by the rise of the iPhone (and iPod touch) (s aapl) as they shake up the enterprise mobility market.

VeriFone (s PAY) is happy to disrupt itself, or so it seems. The San Jose, Calif.-based company today announced PAYware Mobile. The service, which includes VeriFone’s mobile payment system, also includes a card reader disguised as an iPhone sleeve that can be used by merchants to swipe cards and accept payments. The product is likely to ship in January 2010.

A VeriFone spokesperson, in an email, took thinly disguised digs at Square when he said that “[T]his is no fob that can be easily damaged” and “Nobody seems to know whether Square is secure or what the fees are with their system. The VeriFone system is definitely a grown-up payment device.” There is one aspect of Square, however, that sets it apart from its competitors: its use of social networking tools and virality. It is squarely shooting for person-to-person commerce.

Also of note is the fact that Incase is rumored to be making payment sleeves with similar commerce functionality that fit around iPod Touch devices and are being used at Apple stores now. There are many other iPhone-based payment solutions that are currently under development. As I’ve said before, the iPod Touch is Apple’s stealth weapon and is causing disruption across the industry — including in enterprise mobility and in expensive hardware.