Square Inc., the mobile-payment startup founded by Jack Dorsey, is giving smaller merchants more flexibility in how they pay for credit-card transactions, increasing competition with PayPal's rival card reader.
Businesses with less than $250,000 in revenue a year will have the choice to forgo the standard rate of 2.75 percent per credit-card swipe and instead pay $275 a month with no fees, Dorsey said. Square lets retailers accept payments through a device that plugs into a phone or tablet.
Dorsey is aiming to give customers a reason to choose Square over PayPal Here, a mobile card reader from the eBay Inc. unit that also plugs into the headphone jack of a smartphone yet charges less, 2.7 percent per transaction. The companies give away the devices, which both accept the four major types of credit cards, and generate revenue by collecting swipe fees.