updated 5/23/2011 6:50:27 PM ET 2011-05-23T22:50:27

First, mobile payments service Square made it easier for merchants to accept credit cards anytime, anywhere, with just a smartphone and a tiny, plastic credit-card reader. Now, the startup led by Twitter co-founder Jack Dorsey hopes to show them they can abandon cash registers, too.

Square already has a smartphone app that allows people to pay for items by swiping their credit card through a tiny reader that plugs into the headphone jack of a phone or iPad. Customers can sign their name on the device's touch screen, and then have a digital receipt sent to them via email or text message. About 500,000 merchants have these credit-card readers, which Square has given away for free since 2009. In return, the company takes a 2.75 percent transaction fee on sales.

On Monday, Square announced new software, Square Register, to do more. The new app takes over many of the sales features that most stores use cash registers for. It lets merchants keep tabs on inventory and change prices. A menu option allows restaurants to post food options and special deals that customers can see on their smartphones, using a companion app called Square Card Case.

Card Case is available for download after paying with Square at one of a number of merchants hand-picked by Square to participate. It acts as a digital wallet and directory and stores digital receipts for everything you've purchased over Square. For merchants, it serves as a replacement for physical rewards cards some merchants give customers to thank them for repeat visits. The app also has a directory listing local Square-accepting businesses that let users buy items on their phones when they're close to a participating shop. Card Case users can also pay at stores that are using the Register app by saying their name to the sales clerk.

So far, Card Case only includes 50 hand-picked cafes, salons, flower shops, restaurants and other retailers in New York, St. Louis, Los Angeles, San Francisco and Washington. The company plans to gradually add others.

Copyright 2011 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.


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