The competition among mobile payment providers is heating up today, as PayPal officially takes on Square. The payments company announced a new mobile dongle called PayPal Here that will process payments for small businesses internationally.

PayPal Here is a small, triangular dongle that plugs in to the audio jack of your mobile device. Through the app, your customer will be able to view the total as well as sign using his or her finger. Unlike Square, PayPal Here comes with a scan card feature — which also accepts checks — should you forget the dongle. PayPal’s solution will also track cash purchases and send electronic invoices.

The company also introduced Local, a direct competitor to Square’s Card Case app — which lets consumers store their financial information in an app and speed up the checkout process. Local will enable an individual to let you know when he or she is near and once he or she arrives using a geo-fence.

Upon sign-up, you will receive a PayPal debit card that gives you one percent back for purchases made using the card. That card will have a 1.7 percent transaction fee. Non PayPal cards will have a 2.7 percent transaction fee, which is .5 percent less than Square.

It’s too early to tell how successful PayPal Here will be against Square. Although a young company, Square has shown impressive growth, processing $4 billion in transactions a year.

A “few thousand” merchants are getting it today, but it won’t be available for everyone for at least a few weeks. If you’re interested in integrating mobile payments into your small business, it’s worth spending some time researching both services.

[Via: VentureBeat, Image credit: ehpien]