[awaz]

Since Square adapter interfaces with mobile devices using the audio input, the swipe basically produces a sound (corresponding to the credit card) that is fed to the mobile device. By recording and replaying the sound, the credit card transaction can be completed without swiping the card.

But that does not mean frauds exploit it easily.

Any one who has access to the credit card already has the credit card numbers and the security code. One could always use that information and order items online. But there are security mechanisms that protect such usage. The audio recording is identical to storing the credit card number. Square uses other mechanisms (like capturing location of each transaction) to deter fraud behavior.