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Square challenges Amazon, eBay with online marketplace

The new Square Market from the mobile payments startup will allow merchants to sell their wares online without the expense of building and maintaining their own sites.

Square Market in action.

Square, the mobile payments startup best known for its credit card readers, is branching into e-commerce to take on the likes of eBay and Amazon.

The company on Tuesday launched Square Market, an online marketplace that allows merchants to sell their wares online without the expense of building and maintaining their own sites.

"Creating an online marketplace is our next step in making commerce easy for everyone," Ajit Varma, Square's director of discovery, said in a statement. "Square Market makes local businesses accessible to customers down the block and across the country."

The marketplace allows sellers to create a profile, manage their product listings, and add photos. Merchants can then use social media such as Twitter or Facebook to alert buyers to deals on the marketplace.

Like Amazon, which charges 99 cents when a listed item sells, Square's listings are free but the payments processor collects 2.75 percent of the item sale price. eBay's charges range from free to 30 cents

However, Square won't handle fulfillment; as with transactions on eBay, product shipping is the responsibility of the seller.

Until recently, the core business for San Francisco-based Square was a device that lets a merchant or individual accept credit cards though a cell phone or tablet. But the company has been steadily building a roster of merchants that accept its service. The company recently landed coffeehouse giant Starbucks as a partner.

The new marketplace offering could go a long way toward attracting a new legion of clients of its mobile payment service, putting its brand and payment dongles in front of a wider audience and perhaps make the notion of paying via its service natural to millions of new people.

Correction, June 26 at 11:30 a.m. PT: This story was updated to correct Amazon listing charges. Listing is free, but Amazon collects 99 cents per sale.