Oct. 23 (Bloomberg Businessweek) — Etsy was introduced in 2005 as a way for people who sold things at craft fairs to set up shop online. Nine years later it’s heading the other way. The company said on Thursday it would begin distributing card readers to its merchants so that they can use those long weekends in their booths to improve their status on the Internet. The readers are free to any merchant in the U.S. with a store on Etsy who uses the company’s direct checkout payment service online.

Etsy is No. 30 in the Internet Retailer Top 500 guide. Etsy did $1.35 billion in web sales in 2013. The company is also No. 51 in the Mobile 500.

Etsy is entering an already crowded marketplace. Square, PayPal, and Amazon.com all offer card swipers in varying shapes and sizes. About 35% of people with Etsy shops are already selling at craft fairs, and many of them are already accepting payments in this way. Switching to Etsy’s version would require changing habits and paying a little extra: At 2.75%, Etsy’s fee is higher than PayPal’s and Amazon’s (but the same as Square’s). On the other hand, merchants using Etsy’s reader don’t pay the 3.5% transaction fee it charges for online orders.

Etsy doesn’t think it has to compete on price. Its competitors in payments have already turned to new ways to distinguish themselves, using the hardware to draw in merchants and then pitch them on inventory management, interactive receipts, and other services. If Etsy can do this better than the crowd, its merchants may be willing to pay a few extra cents for every $20 transaction. “Supporting the shop, that’s more important than getting the lowest rate,” says Camilla Velasquez, Etsy’s director of payments and multichannel sales.

Etsy does have something unique to offer. Its readers work with a smartphone app that links the site’s online store to their physical activity. This gives the seller access to her inventory for easy checkout. Also, if someone with an Etsy account buys a necklace from a booth at a flea market, he can write a review that feeds back to the seller’s page online. Buyers who use Etsy can also get receipts that allow them to, for instance, add sellers to their “favorites” list on the sites.

The biggest challenge may be timing. The first era of smartphone payments is on its way out. Apple just launched its mobile payments system this week, and Etsy’s dongle won’t be compatible with it. Also, starting next October, merchants who accept payments from magnetic-stripe cards, rather than more secure cards with computer chips, will be liable for any fraudulent charges they accept. Readers for chip cards will be more expensive, and that could make it hard for Etsy to pass them out for free.