When Square launched its mobile card reader in 2009, VeriFone Systems (PAY) was on its heels with PayWare Mobile. Now VeriFone is ready to roll out another Square rival, which it calls Sail.

Square and PayWare Mobile were designed to be used off the shelf; Sail was designed for small businesses with technical savvy. VeriFone plans to offer Sail with open-source software that developers can adapt to work with merchants' inventory software. Sail can also be used as-is, just like VeriFone's earlier product.

Developers will be able to register with the San Jose, Calif., terminal maker to receive programming interface tools. By the end of the year, Sail will work with several different advertising platforms and smartphone apps.

"Square did a great job in showing everyone there is a micromerchant market," says Greg Cohen, senior vice president and general manager with the SMB Commerce group at VeriFone. "But Square only works with Square [software] … ours is open to develop other applications on top of it, or inside our application."

Other payment companies, like PayPal and the major card brands, offer developers toolkits to better integrate their payment products.

VeriFone is "playing catch-up baseball in a market that is now crowded by Square, PayPal" and others, says Brian Riley, a senior research director in the bank cards practice at CEB TowerGroup. "It's a play that they have to make, and they are definitely making it late in the game."

Since Square's launch, VeriFone has criticized the rival product. Its most blatant broadside was a website it made dedicated to the idea that Square's reader could be adapted to work as a skimming device. Square endured the attack and has also worked to improve its device's security.

Sail is the first product to come out of VeriFone's roughly five-month-old SMB Commerce group. Cohen joined VeriFone about six weeks ago. VeriFone has a better shot at success with Sail than with PayWare Mobile, says Rick Oglesby, a senior analyst at Aite Group.

"Their previous strategy was to work with traditional merchant acquirers who weren't focused at targeting micromerchants, so there was a bit of a mismatch between the product and the channel," he says. "This is a step forward because they are now matching their products and their channels."