Many small business owners are put off by the costly and bulky credit card processing equipment that is required to swipe customer’s credit cards on the go. A number of new company’s are using one of the hottest consumer products ever, the Apple iPhone, in a unique way to address that very problem.

Companies like PAYware Mobile and Square are launching new mobile payment services that turn an Apple iPhone (or other similar smartphone) into a credit card processing machine with the use of an external card swiping dongle.

There are a number of Apple iPhone applications like iSwipe and iTouch2Pay that attempt to solve the same problem but Square and VeriFone’s PAYware Mobile are among the first to attempt to retrofit a merchant’s phone to turn it into a handy dandy portable credit card processing machine.

Fees for using the new mobile phone payment services range from approximately $30/month and 17 cents per transaction for PAYware Mobile to a yet to be determined pricing model from Square. When additional information becomes available from Square it will be easier to compare Square with PAYware Mobile.

The Square mobile payment service was launched by Jack Dorsey, the co-founder of the popular online messaging service Twitter, and early investors have already pegged the valuation of Square at $40 million before the service has even officially launched.