I heard about the idea of making a small accessory for the iPhone to swipe credit cards a while back. Now a store in New York is actually testing such a credit card reader for the iPhone.
According to Cool Hunting (Via Engadget) the Self Edge store is using a small credit card reader that plugs into the iPhone headphone jack. After typing the amount on the iPhone credit card reader app, the customer just signs with his finger and provides an email address where the invoice should be sent to.
The payments are processed by Square. This sounds like a great solution for sellers and buyers. No paper and the receipts even show the location on the map of your purchase.

This CC reader for the iPhone is so small that you could carry it with you for some instant business transactions anytime and anywhere. You could be at a flea market and just take credit cards with your iPhone or get money back from a friend you lent $100 the other day.

There is no information available yet on how far along this credit card solution for the iPhone is to actually becoming widely available.