Dwolla Review



Dwolla Overall Rating

A+ Credit Card Processor Rating

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Dwolla Overview

Dwolla Logo

Dwolla Logo

Dwolla (dwolla.com) is a Des Moines, Iowa-based startup that is on a mission to radically change the electronic payments industry. The company was founded in 2008 on the premise of bypassing credit card Interchange fees (aka: swipe fees) and providing a low-cost payment service to businesses and consumers. Dwolla has created a proprietary payment network similar to that of VISA and MasterCard, and Dwolla’s network does not charge a percentage fee for the transaction like a traditional merchant account does (costs will be covered below). Instead, the company eliminates credit card use altogether by linking consumers’ Dwolla accounts with their checking accounts. The service may sound similar to PayPal, and in some ways it is, but Dwolla is approaching the concept from a very different angle.

Although Dwolla’s payment concept is not exactly a new one, its marketing and business strategy is completely unique. With help from a few banking and financial institution investors, Dwolla has created a payment network that eliminates all of the common fees that merchants incur from accepting card payments. Additionally, the company’s network eliminates the common transfer delays and fraud that plagues similar networks such as the ACH network that most banks utilize. Essentially, Dwolla is a global system for instant cash transfers.

Dwolla can be used for payments between individuals, businesses, or both, but the focus of this review will be the consumer-to-merchant acceptance side. Merchants can accept payments the same way individuals can pay each other, or they can use features that are better suited for their needs. These include website integration and plug-ins for shopping carts as well as tools that can be used to accept payments at the merchant’s location. The company has made major headway in the payments market and has reported that it is processing $30 to $50 million in transactions every month.

Expand to see a video introduction to Dwolla

Dwolla Sales & Marketing Tactics | A+

Key Points – Sales & Marketing 
Uses independent resellers? No
Promotes deceptive rate quotes? No
Discloses all important terms? Yes

Dwolla primarily markets itself via its website and uses no deceptive advertising or marketing tactics that are apparent to this reviewer. There are also no complaints regarding the company’s sales tactics to be found on this or other consumer protection websites, indicating that there are no issues with hidden fees or rate increases.

Dwolla Marketing Example

Dwolla Costs & Contract Terms | A+

Key Points – Costs & Contract Terms
All transactions: $0 or $0.25
Termination fee: None
PCI compliance fee: None
Equipment lease: None

Dwolla probably has the most attractive pricing of any electronic payment service on the market. The company charges no fees for transactions under $10 and only 25 cents per transaction for any amount over $10. There are no additional fees whatsoever (including no PCI Compliance fees) and no service agreement or cancellation fees. Dwolla’s pricing makes it especially cost effective for merchants who deal in low dollar sales as well as merchants that typically have high dollar sales.

Dwolla Complaints and Service | A+

Key Points – Complaints & Service
Total complaints: 20
Live customer support? No
Most common complaint: Transfer time

Dwolla has only about 20 complaints filed in the usual online forums, including Ripoff Report and the comments section of this review; however, the content of these complaints appears to describe isolated incidents and simple merchant misunderstandings surrounding the $3.00 monthly fee for Dwolla Instant (an opt-in service that offers up to $500 in instantly transferrable cash). This $3.00 fee is clearly disclosed on the Dwolla website and will not be considered deceptive for the purposes of this review. The company provides email support and help articles published on its website.

Dwolla BBB Report | A- (CPO Adjusted)

Key Points – BBB Report
Product/service: 11
Billing/collection: 2
Advertising/sales: 1
Guarantee/warranty: 0
Delivery: 0

As of this review, the Better Business Bureau (BBB) is showing Dwolla as not “BBB Accredited” and is awarding the company a “B+“ rating based on 14 complaints filed in the last 36 months. Of the complaints, 11 are due to problems with service, two are related to billing and collection, and one has to do with advertising or sales issues. All but two of the complaints were resolved to the customers’ satisfaction. In light of these figures, we have slightly adjusted the BBB’s grade to an “A-.”

Bottom Line

Dwolla is making waves in the credit card processing industry. The company offers a low-cost, low-risk payment alternative for merchants. The only drawback to the service is that both the merchant and customer need to have Dwolla accounts. Therefore, the service is best used as a supplement to a traditional credit card processing service. The service is especially useful for business-to-business payments and rent payments.

This review was originally published on 2/8/12 and was last updated on 7/11/14.

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About the author

Phillip Parker

Phillip Parker is a former merchant services agent turned small business advocate and the author of "Fee Sweep," which teaches merchants how to dramatically lower their processing rates, eliminate junk fees, and avoid fine-print scams. He founded CardPaymentOptions.com to help merchants enact positive change in the credit card processing industry.


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11 comments

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  1. ED

    Why is Dwolla asking for SS# to collect my online poker winnings? I believe people give out SS# when they won $600.

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  2. payam golriz

    DO NOT USE DWOLLA TO SEND MONEY!

    Here’s my nightmare story and their refusal to help:

    I made a purchase online and the seller asked to use Dwolla. At first it looked like a reputable website but I’ve come to find out there’s no support behind it. Long story short, the seller has run away with $2000 of my money, and he’s used Dwolla to scam thousands from others as well. After their “investigation”, they concluded that they can’t get in contact with the seller so they can’t do anything about the claim. Meanwhile I have email correspondence from multiple people scammed by this crook. HOW CAN YOU CALL YOURSELF A REPUTABLE SERVICE? YOU ARE HELPING SCAM ARTISTS…..

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    2 / 3 found this review helpful.
    1. Phillip Parker

      Hi Payam,

      Can you elaborate on the transaction you made? What did you purchase and how did you communicate with the seller?

      Did you find this review helpful? Yes   No

      5 / 5 found this review helpful.
  3. Nathan

    I also disagree about the $3 fee complaint, It clearly says their is a a $3 recurring fee and that your credit will be checked that’s why I did not activate it yet.

    Did you find this review helpful? Yes   No

  4. Matt

    So far Very Slow to get money. I received a transfer to my Dwolla account on 4/19 and Dwolla said the funds would clear by 4/25. Well im still waiting for the funds. I called and the customer service rep said they needed information from the person that was sending me the money. This person is a friend whom never received a call or email stating they needed additional verification from Dwolla. I asked my friend to call which he did and Dwolla wanted him to fax his drivers license to them? Kinda odd but he did. Now they are saying it will take an additonal 4 days to clear and be in my Dwolla account. They indicated that I will have to just wait. There is not escalation or expedite that can be done. Then it will take another 4 days to transfer to my bank. WOW… This is going to be an over 2 week transaction… Still have flaws IMO.

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    1 / 1 found this review helpful.
    1. Lisza

      Paypal does this same thing now. When person to person is sending money the one sending has to verify they sent it before they will release funds, but my experience with paypal is that once it’s verified they release it quickly. I have had bad experiences with a lot of these so called merchants/processors it’s a nightmare dealing with them. They are bullies and do what they please.

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  5. Mike Lee

    I’m thinking there is a security flaw in Dwolla. I have no account with Dwolla, and yet a party named Myron Peppers managed to get Dwolla to link my checking account to Myron and they hacked my account for $650.00. Thankfully, I spotted this activity before the funds transferred through Dwolla, and Dwolla stopped the transaction from going through. My bank also took action to stop the transaction.

    If the service they provide is supposed to be for subscribers to their service only, and I am not a subscriber, how could Myron Peppers do his thing? I’m a bit disturbed with this incident.

    M.Lee

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    1 / 1 found this review helpful.
    1. E

      Yes, I agree. Same thing happened to me and I knew nothing of them.

      Did you find this review helpful? Yes   No

  6. Jeff Smith

    AVOID INSTANT TRANSFER SERVICE (HIDDEN FEES): I’ve been a DWOLLA customer for about a year, regularly making deposits of a substantial amount of money each time. The delay in deposit from my linked bank account got annoying and one day I noticed a message after making a deposit, encouraging me to enable DWOLLA INSTANT feature for instant bank transfers. Unfortunately, this is not exactly true. They actually open a line of credit for you starting at a low $100 limit. Also, they fail to ever mention a $3.00 recurring monthly fee associated with this feature (they hide any mention of this fee deep in the terms of service – never once explicitly informing the user of any fees). Once you enable DWOLLA INSTANT then you can’t disable it again without paying the fee. I contacted their customer support literally 5 minutes after I enabled the feature to basically be told “deal with it and pay the fee.” I’m sorry but I expect more from a financial institution who I regularly have done business with over the past year. If they’re so deadset on getting my $3.00 with deceitful tactics which are NOT STANDARD in their industry (usually businesses are upfront about any fees, especially recurring) then they can have it but they will not keep my business. My advice is find a financial instution who actually has a personable customer service abd appreciates customer loyalty. I feel like I’ve been scammed and can’t help wonder how many other customers they’ve pulled this over on to get $3.00? A few hundred thousand?

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    3 / 3 found this review helpful.
    1. Kern

      I feel the above negative comment regarding Dwolla’s Instant funding service is disingenuous, or perhaps simply poorly informed.

      Dwolla discloses the reocurring $3 fee for Instant very plainly on http://blog.dwolla.com/its-instant/ – that’s just one click and a screen’s worth of reading off their main page.

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      1 / 1 found this review helpful.
    2. Catrachos

      The monthly fee is listed on their fee page, which can be clicked at the bottom of the page. Seems transparent. Could be a bargain, or not, depending on how you use the service. Similar level of service from other financial institutions may appear to be free, but aren’t, as they do cover their costs (and protect profits) making funds promptly available for clients in other ways than charging up front.

      Did you find this review helpful? Yes   No

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