Amazon takes on Square, PayPal with new iOS-connected 'Local Register' card reader

Amazon's new system works much like its more established competitors — users attach a small, plastic card reader to the headphone jack of their handset or tablet that converts input from a credit card's magnetic stripe to audio waveforms. A companion application then interprets the reader's input and handles communication with Amazon's processing backend.

Rather than offer the reader for free as Square, PayPal, and Intuit do, however, Amazon will charge users $10 up front and credit that amount back in processing fees. The company will also charge just 1.75 percent of each transaction through the end of 2015, increasing the fee to 2.5 percent afterwards.

Square and PayPal charge 2.75 percent and 2.7 percent, respectively. Intuit's GoPayment charges 1.75 percent for subscribers, but 2.4 percent for users on pay-as-you-go plans.

Amazon promises to deposit funds into users' bank accounts the next business day following a transaction, and they will be made available for purchases on Amazon's website "within minutes." The program is limited to businesses based in the U.S. to start.