(Reuters) - Mobile payments company Square Inc's credit card readers will be sold at AT&T Inc's stores making them more accessible, as the two-year old start-up takes on established payment processors.

Square, started by Twitter Inc co-founder Jack Dorsey, signed the No. 2. U.S. carrier on Tuesday, adding to growing list of retailers, including Radioshack Corp, Best Buy Inc and Apple Inc, that sell its card readers.

In a statement, Square said AT&T's 1,000 outlets would bring the total number of stores retailing the device to over 20,000.

Square, which was valued at $3.25 billion at its last funding round, sells card readers that plug into mobile phones enabling businesses to accept credit card payments using an app. When a card is swiped, Square takes a 2.75 percent transaction fee.

The gadget works with iPhones and Android smart phones.

Earlier this month, Square had signed Starbucks Corp's as a merchant location using its devices to process payments at its coffee shops.

(Reporting by Himank Sharma in Bangalore; Editing by Saumyadeb Chakrabarty)