As we first reported over the summer, Twitter creator Jack Dorsey has a new project. Originally known as “Squirrel,” the name has been changed to Square, but the idea remains the same: A hardware/software combination for mobile devices (launching first for the iPhone/iPod touch) that allows vendors to easily accept and process credit card payments. Our full post on Square is here.

I had a chance to catch up with Dorsey today at the new Sightglass Coffee (which Dorsey is an investor in) in San Francisco. In the video below he talks a bit about the idea behind Square, and then we do a demo in which I actually buy mine and Dorsey’s coffee at Sightglass (one of the merchant launch partners for Square). It’s a bit hard to see the iPhone’s screen due to the daylight, but you can easily see just how fast Square works for transactions. Simply put, it’s amazing.

Also note how I can sign with my finger on the iPod touch’s screen. And I can request to get a receipt via email, which I enter the first time, but the app will remember every time you come back and use the same credit card. Also coming in the future is a way to send a recepit to your phone immediately via SMS. And that can also be used to verify that it is actually you making the transaction. You can also associate a picture with your credit card account through Square’s website so that a vendor will know it’s actually you authorizing the transaction. There is a lot to love here.

Below find some pictures of Sightglass which for now is just a coffee stand in the SoMa area of San Francisco, but will early next year morph into a very large cafe.