Mobile payment tool Square has won the endorsement of President Obama and is to be used for his re-election campaign.

Staff will be given Square hardware to process donations from supporters. The small credit card reader plugs into the top of iPhone, iPad and Android devices and a free Square app processes the payment.

Mobile payments are predicted to finally gain a foothold with consumers in 2012, so gaining the presidential seal of approval is a massive endorsement for Square – which was created by Twitter founder Jack Dorsey.

More than 1m merchants have signed up to use the tool and its hardware has been used on smaller election campaigns, but never something on the scale of a presidential re-election.

But as well as providing a handy PR boost Square could stand to earn a huge amount of commission.

The Federal Election Commission records that Obama’s 2008 election campaign earned $335,139,233 from donations of $200 or less.

Assuming these are the sorts of donations that are likely to be put through in person on mobile devices, Square’s 2.75% cut of each transaction should be a good earner.

So far in 2012 the mobile payment market has been largely dominated by developments in NFC technology, but Square’s mobile credit card readers are another convenient method of processing mobile transactions.

It has already established itself with small businesses in the US as it bypasses the need to buy a card reader and sign an expensive contract with a credit card company.

In 2011 the company predicted that it would process $2bn of payments, but in comparison technology analysis firm Yankee Group predicts the value of NFC transactions will grow from $27m in 2010 to $40bn in 2014.

It should be noted that Square offers different functionality to NFC technology – its average payment is $75 while NFC allows a maximum transaction of around £20, but that’s not to say that NFC technology won’t develop to allow larger payments.

Plus Square is taking on some major players in the NFC market – Google, PayPal and Visa have all leant their support to the technology.

All things considered though, it seems likely that the two technologies will exist side-by-side with NFC taking hold among major retailers while startups and small businesses use Square’s cheaper technology.