Verizon invests in Flint Mobile, a Square competitor that uses no hardware

Smartphone payments processor Flint Mobile has raised a $9.4 million Series C as it continues to attract the attention of mobile carriers. Verizon Communications’ venture arm led the round, with previous investors Digicel, Storm Ventures and True Ventures (see disclosure) participating.

Flint offers a payments service similar to Square Reader, using the smartphone as a portable point-of-sale terminal that can take process any credit card transaction. The difference is Flint doesn’t use a hardware reader to read the magnetic stripe on a card. Instead it uses the smartphone’s camera to scan the card, after which Flint verifies the card and processes the transaction in the cloud.

Flint also announced a new online selling feature, letting its merchant customers put a payment button on their websites. Their customers would enter their credit card data manually, but the transaction is handled over the same infrastructure, giving merchants a unified online/in-store payments system.

[company]Verizon[/company]’s investment is particularly interesting, since it could offer a hint of Flint’s future business model. Digicel, a pan-Caribbean mobile carrier, invested in Flint last year. Though neither has announced plans to offer Flint’s service to customers, it wouldn’t be difficult for either to offer it to small business customers as a simple application download.

DisclosureFlint Mobile is backed by True Ventures, a venture capital firm that is an investor in the parent company of Gigaom.