Dwolla

Merchant Warehouse |

January 16, 2013

Mobile payment applications increasingly focus on e-wallets, Apple Passbook and other dedicated paying options for goods and services. The Dwolla platform offers similar electronic funds-transfer benefits by focusing on the other side of the equation, replacing currency with an electronic unit of exchange. The Dwolla application charges minimal fees for each transaction, and exchanges under $10 cost nothing, providing financial benefits to consumers, retailers and developers. Versions of the application are available for both Android and iOS systems.

Iowa-based Program Creates Global Platform for Transferring Funds

Entrepreneur and outside-the-box thinker Ben Milne, who hails from Des Moines, envisioned a simpler way to transfer funds based on bank accounts instead of credit cards. The socially inspired business project limits its fees to 25 cents per transaction and uses third-party applications to supply payment information so that consumers never provide direct information or links to their accounts. This practice makes fraud and theft considerably more difficult for criminals. Goals of the technology include the following benefits:

  • Moving money becomes fast, safe and affordable.
  • Currency holds its inherent value instead of losing percentages of its value to fees, service charges and interest.
  • Simplified transfer procedures allow consumers to click on a name and send money instantly.
  • The program makes it easy to split restaurant checks, make consumer payments for goods and services and enable funds transfers between businesses without writing checks.

Dwolla Instant

TMG Financial Services acts as the lender of record for Dwolla Instant applicants. This lending feature gives members instant access to cash loans up to $500 for only a $5 flat fee if borrowers repay the loan before the statement date. Membership in the program costs just $3 per month, and late fees cost an additional $5, making them cheaper than overdue library books or movie rentals.

Attractive Pricing and Increasing Merchant Acceptance

Dwolla offers a convenient Guest Checkout feature that allows consumers to make online payments without needing a Dwolla account. The company feels that consumers should be able to use the service without joining another club so that they can make ideal transactions for minimal fees. More merchants in 50 states now accept the payment option, and the state of Iowa allows consumers to use the option for tax payments and refunds.

  • Niche applications increasingly avoid credit-card fees by accepting Dwolla payments.
  • The mFoundry service provider accepts the program, and its clients include more than 800 banks that allow the payment option for deposits, paying bills and loyalty programs.
  • Dwolla offers an online Places page, and consumers can search to find merchants that accept the payment tool.

Security and Trust

The Dwolla platform uses advanced security technology from McAfee® Security Scan, Integrity Technology Systems and the TRUSTe® Web Privacy Seal Program. The following table shows some of the security protocols that protect consumers:

Encryption
for Websites
VeriSign provides extended-validation SSL certificates using encryption protocols that range from 128-bit to 256-bit levels of protection.
Hosting Reliability Innovative processing technology ensures safe encryption, secure storage and confidentiality. Built-in redundancies and a secondary processing center help to guarantee operation in case of natural disasters.
Disputes Dwolla offers free arbitration to resolve disputes between parties of financial transactions.
Mobile Security The application acts as an agent between consumers and merchants so that merchants never receive personal credit information. Multiple firewalls prevent unauthorized hacking, and 24/7 monitoring protects the system from outside threats.
Email Notification and Social Network Security Third-party APIs protect financial information and provide notifications by email of each transaction so that members can spot any unauthorized activity immediately. Social networks never receive direct financial or personal information.

Increase Profits, Eliminate Checks and Facilitate Peer-to-peer Payments

Dwolla offers consumers and merchants more convenient ways to make electronic payments without the premium fees associated with credit cards. Some people view Dwolla as a PayPal competitor or another e-wallet application, but these systems base their payment applications on the credit-card system, and each participant in the chain extracts fees. Dwolla offers simplified fund transfers for only 25 cents for each transaction, and small transfers under $10 cost nothing.

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