One of the four largest banking institutions in the U.S. is now trying to compete head-on with a startup.
Bank of America will launch a new mobile payments service early next month called Mobile Pay on Demand, which uses a dongle similar to Square's to allow merchants to process credit card payments from an iPhone, iPad or Android device.
Mobile Pay On Demand will become available on Dec. 3 and is geared towards the 2 million small and medium-sized businesses that have relationships with Bank of America, but can't afford to use one of its payment terminals, according to a statement from Bank of America EVP Trevor Rubel given to AllThingsD. It has a swipe fee of 2.7%, which is slightly less than the 2.75% that Square charges.
Bank of America isn't the first company to try to take a page from Square and it probably won't be the last. PayPal rolled out its own credit card reader earlier this year and Groupon is making a big push into the payments business as well.