Australian financial services company FlexiGroup has joined the battle to win over small businesses using smart phones as mobile cash registers.

FlexiGroup has launched its Paymate OntheGo credit card reader package, a product that removes the need for small businesses to have EFTPOS terminals.

The product comprises a small swiper that is plugged into a smartphone’s audio jack and a downloadable application that enables the smartphone to operate as a point-of-sale terminal.

A merchant or tradesperson can swipe the card through the card reader that is plugged into the smart phone, and accept payments.

FlexiGroup chief executive John Delano said the manner in which small businesses were being paid for goods and services was undergoing a revolutionary change.

“Fast and regular cash flow is the lifeline of small business,” he said.

The credit card details are processed on the spot and payment is made directly into the business bank account,” he said.

US-based online payments provider PayPal launched a mobile payments device called “PayPal Here” in Australia, Hong Kong, the United States and Canada in March.

FlexiGroup head of e-commerce Andrew Pipolo said there was significant market potential for mobile payments systems in Australia.

There were 2.7 million small businesses and 61 per cent of Australians were expected to own a smartphone in 2012.

“There’s probably a market potential of probably a quarter of a million devices – it’s very hard to estimate, given that this is new technology into a new market,” Mr Pipolo said.

Mr Pipolo said FlexiGroup and PayPal were the only two providers offering this particular mobile payments system in Australia at the moment.

Mr Delano said Australians were generally early adopters of technology and considering the success of the smartphone payment technology in the US, he expected Paymate OnTheGo to gain significant traction in Australia.