Dwolla: Better Than PayPal?Cecily Kellogg
Dwolla gives everyone the ability to exchange money without paying interchange (credit card fees). This is the core reason our network was created and we’ve grown considerably by concentrating on solving that single issue.
High fees, while exchanging money, is a pain point that millions of people share.
Interestingly, though, Dwolla’s goal isn’t to replace PayPal, although it might look that way on the surface. They actually want to replace credit cards. Dwolla doesn’t connect to a credit card, it connects directly to your bank account (admittedly, you can also do this with PayPal).
Dwolla is incredibly simple; sign up for an account, and transfer money for a quarter. Yes, a quarter. No percentages, and no waiting. In an interview with Business Insider, the 28-year-old founder of Dwolla Ben Milne talks about the massive overhead and other issues that banks and credit cards have with transferring money, and why he wanted something completely different after he was spending $55,000 a year in credit card and other fees with his first business.
All banks are connected by one ACH system. Credit card companies utilize that same system to pay off your credit card charges. Banks internally set along that same system to move money in their own banks. This system in its own right is riddled with flaws — tons of fraud issues and waste and delays. If you’ve ever had a payment take a few days to clear, its because they’re waiting on that ACH system.
We want to fix that system between the banks, take out the delays and make it instant. If we can create this ubiquitous cash layer of distribution between consumers and merchants and developers and financial institutions, that actually fixes the problem.
No one has built a payment network in 30 years — since credit cards. Everybody has concentrated on how we build a portal for credit cards, from digital wallets to Square.
I signed up for an account and it was incredibly easy. I’m eager to test it out with payments from clients in particular (although they will also need a Dwolla account to make that work).
What do you think? Are you also searching for a PayPal alternative? Would Dwolla work for you?