Square's new device

The tech industry was buzzing yesterday with news of Twitter co-founder Jack Dorsey's Square, a new mobile payments startup that allows merchants to swipe credit cards on smartphones. The technology -- which includes a small device that plugs into the audio jack of phones -- allows vendors (think art festivals, coffee shops and other small businesses) to easily accept payments from customers.

The new offering from the San Francisco startup got us thinking about the mobile payment technologies from two Seattle area competitors: Billing Revolution and Innerfence. Innerfence's iPhone app, known as Credit Card Terminal and featured in Apple's national TV ad campaign, is perhaps the most direct rival since it too allows small merchants to process credit cards on the go.

I asked Innerfence co-founder Derek Del Conte for his take on Square, which has raised $10 million from some high profile investors. Here's what he had to say:

Del Conte said that Square's recent funding from the likes of Khosla Ventures is a "big deal" which should help validate the market.

"They see the tremendous potential of the mobile payments market, giving us additional confidence that the work we've done over the last year and the plans we're executing on are focused on a large and growing market," said Del Conte.

In fact, the impact on Innerfence following Square's launch has been pretty dramatic.

"We've seen a large increase in both web site traffic and merchant signups. Many merchants are searching for an iPhone credit card processing solution that is approved by Apple and available now," he said. "I expect that Square will continue to raise the overall awareness of credit card processing on the iPhone."

Del Conte said the next step for the company will be introducing Credit Card Terminal for the Mac, which should be available in the coming months.

Meanwhile, ReadWriteWeb has a great interview with Billing Revolution -- which is led by WeddingChannel founder and former AT&T Wireless manager Andy Kleitsch.The entrepreneur casts some doubt on the Square model, pointing out that there's potential for fraud and that the company may be going after the wrong market opportunity.

Kleitsch tells ReadWriteWeb that established businesses "are not looking for Jack's solution" and that the market the startup is targeting may be too small.

John Cook is co-founder of TechFlash. Follow on Twitter @johnhcook.