PayPal is expected to launch a mobile payment dongle that would allow small businesses to process credit card transactions with a smartphone, according to a GigaOm report.
The dongle, expected to be unveiled at an event Thursday in San Francisco, would put the payment processor in competition with Square, Verifone, and Intuit, sources close to the matter told the blog.
PayPal representatives declined to comment on the report but confirmed the company plans to make a product announcement Thursday.
"While we cannot comment on rumors and speculation, what we can tell you is that at the PayPal event on Thursday we will unveil what we believe will be the future of commerce for small businesses," PayPal spokesperson Anuj Nayar said.
The move would build on the eBay-owned company's recent expansion into credit card territory. PayPal recently began testing a program that allows its customers to use a PayPal card or a mobile phone number and PIN code to pay for purchases at Home Depot stores in the San Francisco Bay Area. By the end of the year, PayPal plans to add 20 more retailers and expand nationally.
The move would put PayPal in direct competition with Square, which is now handling $4 billion in payment volume each year. The company announced an initiative last week designed to replace the retailers' cash register.
A new iPad application called Square Register lets retailers ring up an entire sale on the tablet and accept payment via a Square card reader attached to the iPad. Customers then sign in the app to confirm their purchase.
Updated March 13 at 9:10 a.m. PT to include company comment.