The blog iPhone Alley reported Monday night that Square, the forthcoming mobile credit transaction service co-founded by Twitter's Jack Dorsey, will launch early this summer for the low price of $1. By plugging a small square card reading device into the iPhone's headphone jack, anybody with the device can instantly conduct credit card transactions using the service's iPhone app.

Usually, running credit card transactions means opening up a special merchant bank account and dealing with various fees. Any bank account will work with Square, and the only charge to use the service is $1 for the application and the card reader accessory; however, Square can afford to give away the dongles because they will be banking 2.9% of each transaction. Users can also pick their favorite charity and Square will donate a penny to it from its cut of each transaction.

Not only could this app be the new best way to pay back your friend who bought your drinks at the bar, but it could also become a killer app for small businesses. For just $1, anybody can have the functionality of a full blown credit card reader on their phone. Small merchants won't have to resort to dealing only in cash, and record keeping would be made simple with the service tracking each receipt. Square recently produced the introductory video below to familiarize people with the service (with some awesome use of motion graphics, I might add).

A similar device and service from mophie called "marketplace" plans to bring a credit card scanner to their popular line of iPhone cases. Using this device would mean being stuck with a mophie case, and while the price has not been announced, mophie's cases can range from $10 for a basic hard case, to $100 for their battery pack cases.

Frequent users, however, might be more accepting of a case implementation like the mophie over a small, easily losable dongle like Square. Square's website says the accessory works with "any device with an audio input jack," which means the app will likely work with the iPod touch and iPad as well. One question mobile skeptics may have for both of these services is how it will work if the device is lacking an internet connection or cell signal; can payments be queued up to send at a later time?

Is Square going to be your startups mobile credit app of choice? Or will you be going with the mophie or a similar product? Will these apps even take off? Let us know what you think in the comments.