The recently enacted JOBS Act (Jumpstart Our Business Startups) is a either terrific boost for small businesses looking to raise money, or an invitation to investor fraud, depending on whom you ask about it. To learn more about the potential upside of this legislation, I interviewed small-business attorney Garrett Sutton. He is a Rich Dad adviser, founder of CorporateDirect.com, and the author of five books, including his most recent title, Start Your Own Corporation. (Disclosure: Garrett and I are co-authors of the e-book Business Credit Success: Get on the Financing Fast Track.) Here is an edited excerpt from our interview:

Gerri: Can you fill me in on what the JOBS Act means for entrepreneurs who are looking to raise money for their companies?

Garrett: The JOBS Act is a significant development in fundraising for entrepreneurs. Basically what it does is it loosens the previously very tight restrictions on fundraising in several important ways.

In the past, you may have tried to raise money with a Regulation-D, Rule-506 offering. That’s a private placement where you don’t have to register with the federal government or your state government, so it’s a fairly flexible way to raise money. But you were hamstrung by the fact you couldn’t advertise this offering. It could only go to people that you knew, people you had a pre-existing relationship with such as friends, family or colleagues. So you really couldn’t get the offering out there to a large number of people.

Well, what the JOBS Act does is allow accredited investors, which I’ll define in a second, to to receive advertisements for these private placement offerings. That’s great because previously, these accredited investors couldn’t be reached by any sort of advertising.

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An accredited investor is someone who has either $1 million in net worth exclusive of their home, so $1 million on top of the price of their home. Or, they’ve earned $200,000 a year for the past 3 years, or $300,000 a year if they’re married.

So if you a have $1 million in net worth, or you’re earning a significant amount of income, the Securities and Exchange Commission says look, these people are sophisticated, they can take care of themselves. Our job is to protect widows and orphans. If someone has $1 million in net worth and a high-level of income, they can make their own decisions.

Gerri: Some of the criticisms I’ve seen about this particular act in this area was that it would open the door to a lot of fraud for unsophisticated investors.

Garrett: Yes, we’re going to talk about crowdfunding next, and there is that risk on the crowdfunding side, because with crowdfunding, anyone can invest. You don’t have to be an accredited investor. And so there is sort of a fraud issue that you have to worry about there, but they’re putting in some restrictions that hopefully will minimize that. (Crowdfunding allows companies to raise money from a large number of people over the Internet.) So on the Rule-506 side, you can raise as much money as you want, and you can advertise the offering but it has to come from accredited investors.

Gerri: What do you think is going to happen, in terms of those small businesses who want to raise money? Are they going to have to find companies to advertise for them to these accredited investors? Wouldn’t it be hard to find them yourself?

Garrett: Yes, and the SEC has 90 days to come out with rules on how the Rule-506 side is going to work. On the crowdfunding side, you can raise up to $1 million from anyone and you can advertise it on the Internet. But, you have to go through certain SEC-approved portals and the job of these portals is to make sure that the people offering the securities over the Internet are not fraudsters.

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Now, will some bad apples slip through? Absolutely. I don’t know how you’re going to stop that. Most commentators I’ve talked to have said, “Look, we need to have capital formation. We need to allow people to be able to invest in these startups. We’re going to give up a little bit of, there’s going to be some fraud in the system because of this, because we’re loosening it up. Some fraudsters are going to slip through. But in order to get capital formation and job creation going, we’re willing to let a little of that in to help entrepreneurs get their projects funded.”

Gerri: So, if you’re someone with a small business or starting a small business, when can you reasonably expect this option to be available?

Garrett: On the crowdfunding side the SEC has nine months to put it together and I’m certain they could get extensions if it’s not quite right. But, the industry is moving pretty quickly to work with the SEC to establish these portals. They’re going to be establishing protocols for who can invest, what type of information has to be provided and that sort of thing. So, I would say in the next year, Gerri, you’re going to be seeing this crowdfunding starting to happen.

Gerri: So 2013 is probably the year of crowdfunding. Do you see this replacing the need to establish business credit?

Garrett: No, actually I think it’s going to accelerate the need for business credit if people are able to go out and raise money. They still need to have good business credit as they continue with their business. So, this may help some businesses get off the ground but at the same time, they’re still going to need to establish business credit as they move forward in their entrepreneurial ventures.

Want to listen to the complete unedited interview with Garrett Sutton discussing the JOBS Act? Download the interview here; or play the interview online; or listen to or download it from iTunes.

Though currently Square is arguably the unquestioned titan atop the world of mobile credit card purchase processing, PayPal may now be looking to cut into that business by undercutting the popular startup.

In the very near future, PayPal – the payment processing company owned by eBay – will likely introduce its own plug-and-swipe mobile credit card reading device in an effort to compete directly with Square, according to a report from Bloomberg News. While Square, a tech startup created by former Twitter executive Jack Dorsey, currently has a huge advantage in the field, PayPal will create its footprint by targeting smaller businesses, and will do so with a lower cost for processing transactions.

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Square currently charges businesses using its mobile credit card readers, which plug into the headphone jacks of devices like iPhones and Android handsets, a transaction fee of 2.75% of the total purchase value, but PayPal’s card reader will levy a fee of 2.7%, the report said. A small distinction, but an important one that can help smaller businesses with thinner margins save money over the course of the year.

This is PayPal’s second foray into the world of brick-and-mortar, real-world transactions in a relatively short time after it got its start almost entirely in the online realm, the report said. Earlier this year, the company also forged a deal with the Home Depot to allow customers in its stores to complete transactions with their PayPal accounts at the register.

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“Everybody is thinking that everyone is going to pay for everything with their mobile phone,” Sam Shrauger, vice president of product and experience at PayPal, recently told the news agency. “We don’t actually believe that that has to be the case. We think consumers are going to decide how they want to pay. And what’s important is that they have a wallet – a digital wallet.”

Most experts agree that mobile purchases are going to be the next wave of the future in the purchasing world, and could be worth tens of billions of dollars or more annually by the end of 2015. However, many say that the largest hurdle to clear will be consumers’ willingness to adopt a new method of payment. Once that is cleared, experts say adoption will spread quickly.

Image: Jorge Quinteros, via Flickr

A large number of some of the nation’s largest retailers recently revealed that they would come together in an effort to make a mobile credit card payment system that allows consumers to turn their smartphones into a payment option.

Walmart, Target and more than 20 other major retail companies are now working on developing a mobile credit card payment platform that will compete with similar offerings from other companies, such as GoogleWallet and Isis, the joint venture from AT&T, T-Mobile and Verizon Wireless, according to a report from NACS News. Currently, the various other participants in the development of the retailers’ mobile wallet platformare unknown, but there are indications that one such company is Alon Brands, Inc., which operates more than 300 7-Eleven locations throughout Texas and New Mexico.

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Steve Mott, who runs BetterBuyDesign, a Stamford, Connecticut-based consulting firm that is working with the retailers on the payment system, revealed the two dozen companies participating in the development of the payment system have an annual total revenue of $1.38 trillion, the report said. These retailers are in a variety of industries, ranging from big-box electronics to pharmacy chains and vending companies.

Target released a statement confirming that it was “exploring” this type of payment solution but would not share specific plans at present, the report said.

The companies’ stated reason for developing the system is that they are unsure of the security and privacy provided by the other offerings, the report said. In addition, they believe that the system will give them better insight into consumers’ behaviors and purchasing habits, and would, obviously, cut them in on transaction processing fees that are currently being lost to other companies. In all, some estimates show that the mobile payment system industry could be worth more than $600 billion by 2016.

“A number of merchants are surveying the first generation of solutions and have decided they need to and can build a better system,” Mott told the news site.

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Companies in a wide variety of industries are working on their own payment systems, and very few are currently ready for market. In addition, there is very little infrastructure currently set up to handle this type of purchase. Further, the vast majority of smartphones do not have the embedded technology necessary to complete mobile transactions.

Image: Rochelle, just rochelle, via Flickr

Apple is at the top of the heap when it comes to its devices being used to process mobile payments, but Google has set its sights on becoming a major player in the market.

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Apple’s mobile devices - the iPhone and iPad tablet – are the two most ubiquitous handsets in use when it comes to merchants accepting mobiletransactions, but Google, with portable devices of its own, has a plan to supplant the current leader, according to a report from American Banker. The competitive advantage it may have in gaining a larger foothold in themobile transaction industry is that it, unlike Apple, has its own mobile payment processing system in place, and does not need to lean on third party companies.

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Apple does, however, work closely with a number of companies – including relatively new startup Square and older firms like VeriFone Systems – to develop and promote use of third-party payment processing platforms, the report said. With the devices created by these companies, iPhones and iPads can accept credit card payments, and this transaction method is growing in popularity.

The web giant’s payment platform, known as Google Wallet, is still in development, but could be tied to a number of different services to incentivize use for both businesses and consumers, the report said. Forexample, the company could allow merchants to attach loyalty rewards programs to Wallet to make it more convenient for shoppers to use the service, and shoppers could be further benefited by being able to apply coupons to their account without clipping anything.

When you tie the ability to do couponing with payment, it is more interactive for the consumer and better for the merchant, who can control how they will play with incentives to drive people in the door,” Rich Miner, a partner atGoogle’s investment arm Google Ventures, told the news site.

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The future of mobile purchasing is still relatively unclear insofar as it’s difficult to predict exactly which type of paymenttechnology will catch on with consumers, but experts say that the industry itself will become quite valuable in the near future regardless. Some estimates put the annual value to companies in this industry at a total of $44 billion by just 2015.

For all the mobile payment hooplah as of late, many experts agree that you’re not going to be seeing a whole lot of people buying big-screen tvs in the store tonight just by waving their phones over them. They argue that traditional credit card use is entrenched and isn’t going to evaporate just because there’s a new technology around the corner.

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Experts have projected that by 2015, the mobile payment industry could be worth as much as $44 billion annually. Even as more companies are pouring a considerable amount of assets into developing and testing digital wallet systems, adoption should still be slow enough that credit card users will still be swiping their plastic the old-fashioned way for at least several years to come, according to a report from the Wall Street Journal. It’s going to take a lot of nudging and incentives from the merchant and processor side to get consumers to change their behavior. Plus, it may take the industry several years to issue enough phones embedded with the necessary technology to make a dent on the marketplace.

“There will be a period of co-existence for a long while,” James Anderson, MasterCard’s head of mobile product development, told the WSJ.

Part of the problem is that so many companies are rushing to come out with their own mobile payment systems, and each one says theirs is the best approach. It will take both competitive shake outs, and cooperative working together, to come up with even one viable and scalable solution.

[Related Article: Boku Brings Pay-By-Phone To The Checkout Counter]

Not all US smartphones have the right technology either. Near-field communication (NFC) allows for mobile payment processing just by holding a NFC-enabled device close to a transaction terminal, and it looks like this will be a breakout year for NFC-enabled gadgets. But it’s not the only game in town. Either way, only half of available smartphones are expected to be mobile-payment capable by 2015. Not to mention that many retailers aren’t set up to do mobile payments. However, in a number of those cases, the terminals would only need a software upgrade to become capable of accepting mobile payments.

“The challenge is you’ve got to get the infrastructure built and the people out there to use it before it makes sense,” Charles Golvin, an analyst with research firm Forrester, told the newspaper. “People aren’t going to rush out to buy a device with this capability that they can’t use anywhere.”

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Image: Tom Purves, via Flickr