Summary:

Square, the high-profile mobile payments company started by Twitter’s Jack Dorsey, has yet to launch outside the U.S. But in the meantime, a…

mPowa reader

Square, the high-profile mobile payments company started by Twitter’s Jack Dorsey, has yet to launch outside the U.S. But in the meantime, another, similar-looking competitor has sprung up in the UK: mPowa.

The new service, due to launch in mid-February, this week opened its doors for pre-registration for “small businesses, traveling salespeople and other hard-working Brits“, to received free, square-shaped dongles that plug into a mobile device to let merchants scan people’s credit and debit cards.

Like Square, mPowa will make its money on a fee charged per transaction. Unlike Square, the fee will be lower: 0.25 percent per charge.

mPowa says when it goes live it will work on iPhone, iPad, Android and BlackBerry devices. A spokesperson for the company tells paidContent that the apps to make the dongle work on these platforms are still pending approval.

The spokesperson declined to say whether any companies have signed up to use the service yet. The start-up’s parent company, Powa, already has a relationship with Barclay’s, which has an exclusive deal to sell Powa’s web-based e-commerce platform to businesses in the UK. Some thought that might mean Barclay’s would also distribute the dongles on behalf of mPowa, too — although this has not been confirmed by either party.

We have asked mPowa whether it is at all worried about whether it could face any legal problems from Square for making a device that works and looks so similar to it — or whether it is actually licensing some IP or other technology from Square. We have also asked Square whether this new product poses any issues. When either company responds we will update this post.

In any case, the fact that Square has not launched yet in the UK presents an opportunity for other mobile payment companies to make their own mark among retailers.

Although there have been various mobile payment services around for years already, Square has been a breakout success in the U.S. for the fact that it rides quite neatly on the smartphone boom and makes it very easy for small merchants to use these devices to take payments and cut out expensive, incumbent merchant acquiring companies in the process.

Since launching it has also introduced other services like loyalty programs and location-based alerts. For what it’s worth, it looks like mPowa is also looking to offer other services on top of the card-swiping capability.

Last year Square raised huge funds from high-profile investors, including Visa; a $100 million Series-C round from Kleiner Perkins Caufield and Byers, valuing the company at $1 billion; and an undisclosed amount from Sir Richard Branson.

In November, the company said it shipped 800,000 dongles so far and processed $2 billion in payments annually. It also said it planned to launch internationally sometime this year.

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