I’d heard a rumor about this product coming out, and finally it’s here: The Square. It’s a dongle that plugs into the headphone jack of your iPhone, that reads the magnetic strip on the back of a credit card and allows you to process payments immediately, then send out a receipt right away. And according to the Web site, it’s pretty affordable.

This is a big deal for small businesses. It means that you could run a credit card in front of the customer and have them sign right on the spot, no delays needed. You also wouldn’t need to have a contract for a credit card processing service, which can be expensive as well as lengthy. It also means that traveling salespeople could accept payment on the spot, no matter where they are.

I haven’t heard of any hands-on reviews yet, but this certainly seems like a cool product that has a lot of potential for business. the only drawback I can see is keeping track of the dongle, but it’s so small that it could fit in the pocket easily, so hopefully it wouldn’t get lost. I think this is just the beginning for these type of devices, as my local Apple Store is already using iPod Touches to process payments, and has a special case with a card reader on the back for just this use. Should be interesting to see how popular these devices become in the future.