Dwolla’s Original Business Model
Dwolla (dwolla.com) is a Des Moines, Iowa-based startup that 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 created a proprietary payment network similar to that of VISA and MasterCard, but Dwolla’s network did not charge a fee for each transaction like a traditional merchant account does. Instead, the company eliminated 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 was, but Dwolla approached the concept from a very different angle.
A Brand-New Cash Transfer Platform
Although Dwolla’s use of ACH transfers was not exactly a new idea, its marketing and business strategy was completely unique. With help from a few banking and financial institution investors, Dwolla created a payment network that eliminated all of the common fees that merchants incur from accepting card payments. Additionally, the company’s network eliminated the common transfer delays and fraud that plagues similar networks such as the ACH network that most banks utilize. Essentially, Dwolla created a global system for free, instant cash transfers.
Shift to B2B and Marketplace Platforms
In the past two years, Dwolla has shifted its marketing to emphasize its mass payout API for marketplace-style and business-to-business payments. In fact, it is no longer offering the customer-facing payment product that competed directly with traditional payment processors. As a result, most consumers and merchants will now only encounter Dwolla as the default payment processing platform integrated into an online product or service. We have continued covering the company because it remains a large player in the digital payments sector, but it is no longer a direct competitor of standard credit card processors.
Dwolla Location and Ownership
Dwolla is headquartered at 909 Locust St #201, Des Moines, Iowa 50309. Dwolla states that it is “an agent of Veridian Credit Union” and that “all funds associated with your account in our network are held in one or more pooled accounts at Veridian Credit Union.” Ben Milne is the CEO of Dwolla.
Dwolla Review Table of Contents
- Costs & Contract: Dwolla offers custom pricing for most accounts but has historically allowed users to transfer payments on its network for free.
- Complaints & Service: Dwolla has received more than 50 public complaints.
- BBB Rating: Dwolla has a “C-” rating with the Better Business Bureau and has received 9 complaints and 6 reviews in the last three years.
- Sales & Marketing: Dwolla does not appear to hire independent sales representatives and has received no merchant complaints about its sales practices.
- Rates & Fees: How Merchants Got The Best Rates With Dwolla
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