Can Instant Payments service Dwolla dent the big Banks?


This week Forbes named Dwolla founder Ben Milne as one of the “12 most disruptive names in business.”

The list is made up of people “less content to improve the status quo than to blow it up,”

“Milne, 30, turned a vexation with interchange credit fees into a new business that would make sending money cheap and easy. Dwolla, an online and mobile payment system, lets users pay for bar tabs or dog walkers via e-mail, text or social networks like Twitter. Consumers love the service. Merchants pay just 25 cents in fees for amounts over $10, instead of up to 1.9% of a transaction, plus a quarter, as Visa charges.”

Ben Milne has started a mobile payment network that challenges Visa and Mastercard. Charges small flat fee and moves $1 million daily.

In this video clip Ben Milne has a rant about Banks and building this thing called Dwolla.

Interchange is a $7 trillion global problem.  Interchange fee is a term used in the payment card industry to describe a fee paid between banks for the acceptance of card based transactions. Usually it is a fee that a merchant’s bank (the “acquiring bank”) pays a customer’s bank (the “issuing bank”)

ACH is the platform that connects Banks. The Automated Clearing House (ACH) is an electronic network for financial transactions. ACH processes large volumes of both credit and debit transactions which are originated in batches.

Money doesn’t move but ownership does.

Dwolla has implemented their FISync real-time [instant[ money transfer system which aims to replace the ACH platform and help reduce delays in Bank to Bank payments.

What is Dwolla?

Mission – “Allow anyone [or anything] connected to the internet to move money quickly, safely and at the lowest cost possible”.

Dwolla is a payment network that allows anyone to send, request and accept money. We’re not like those other big payment companies that rely on plastic cards and charge hefty fees. Instead, we’ve built our own network that securely connects to your bank account and allows you to move money for just $0.25 per transaction, or free for transactions $10 or less.

How does it work?

  • Transfer money between Dwolla and your bank or credit union anytime you want, for free.
  • Send money to email addresses, phone numbers, Facebook friends, LinkedIn connections, Twitter followers, and businesses that accept Dwolla.
  • Use Dwolla on the web or with the Dwolla mobile app.
  • No credit or debit cards here. That’s how we are able to keep our fees so low. Some businesses accept only Dwolla, but most accept Dwolla alongside credit cards and other forms of payment.
  • You can send money to someone even if they don’t have a Dwolla account. But, they will need to create one to claim the funds. Businesses need to set up a Dwolla account to accept Dwolla.
  • Only one party pays the fee. By default, the receiver pays the $0.25, but the sender can choose to pay the fee instead.

Dwolla at the Point of Sale

How much did your business pay in credit card fees last year? Stop losing money to transaction fees and start saving big by accepting Dwolla at your Point of Sale (POS).

WDGLL specs

Dwolla is establishing the online and mobile payments service offering and has plenty of road ahead before it generates a return on investment for backers of the start-up.

Dwolla must ensure their software is more robust whilst making it easier for software developers to build interfaces for example the GRID API which could make cash more secure than plastic.

The success of this service is predicated upon the number of Banks who will implement the Dwolla FISync platform.

Presently Dwolla is only available in the US and once the wrinkles have been smoothed out it has a huge potential for a global rollout.

Unfortunately Dwolla was one of the websites impacted by the Spamhaus DDoS attacks this week and must strive to ensure that customers have better protection from CloudFare to build confidence in the service.


1 Comment

Filed under Business

One response to “Can Instant Payments service Dwolla dent the big Banks?

  1. Timothy Bell

    Don’t send money unless you KNOW the recipient already uses DWOLLA; DWOLLA is using currently unregistered recipients to build their account base by extorting their personal information; you cannot get your money without surrendering your SSN, bank account, etc.

    I used to play occasional online poker and NLOP owes me about $27.50 which they sent to DWOLLA – now DWOLLA says to get my money I have to give them my SSN, Bank account numbers, etc. This is extortion, plain and simple. I don’t want a DWOLLA account or relationship; I just want my money. Well they won’t get my personal information but I am considering a class-action lawsuit for all of those accounts with money in them where law-abiding private citizens are refusing the extortion; this is theft, plain and simple. And I’ll be including NLOP in this as they took my monthly fee but paid my money to a third party. NO MORE.

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