Hi - I'm one of the developers of PayPal Here, our card reading mobile app. What you're describing is in theory possible, though you'd pay the "card not present" rate (3.5% + $.15 in the US) because you're using an unencrypted crappo swiper. But we do have APIs that would let you do this. In theory you could use our reader too, but then you'd have to reverse engineer the audio interface which would be a pain in the arse. It would be a cool demo though, so if I can provide help, I'm happy to.