
This 28-year-old's Iowa startup moves $350 million a year. - anandkulkarni
http://www.businessinsider.com/this-28-year-old-is-making-sure-credit-cards-wont-exist-in-the-next-few-years-2011-11?page=1
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Jd
Great quote: "In my own naive way, I would never build a company anywhere but
Iowa so maybe I just don't know any better. My personal feeling is, if you
want to build it, where you are is just an excuse. Figure out what the area
has to offer you and then leverage that. Hustle your ass off and make it
work."

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phaet0n
Surely the problem at hand is not simply an atomic transaction in a
distributed system, any HN reader worth her salt can do that.

The problem is satisfactorily handling money laundering, fraudulent
transactions, and a myriad other user-facing issues. A better question is what
regulation should exist in this space, and the actual mechanics of the
payment.

Who gets to say the buyer's money is good, and that the seller has adequately
dealt with the conditions of sale?

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hippich
I have strong feeling that majority of money flow comes from Bitcoin-related
services. Would be interesting to see real numbers.

~~~
wmf
Dwolla lost a lot of Bitcoin business when they started doing chargebacks (the
only reason Bitcoiners were using Dwolla to begin with was the claimed lack of
chargebacks).

~~~
hippich
Right, but Dwolla is still an option to fund tradehill/mtgox/etc. I.e. PayPal
similar problems, but is not listed as a funding option on any of these
exchanges. My gut feeling says Dwolla profit a lot from bitcoin exchanges and
that's a reason they allow exchanges to use their services.

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bartl
This solves a problem of exuberant costs for large payments, but my main
problem is the reverse: small payments, transactions of a few dollars each.
$0.25 cents for a transfer of just a few dollars is way too high.

~~~
GFischer
We're working on it, and so are a number of other startups (I'll have to refer
you to BuySimple - <https://www.buysimple.com/> \- I guess, since we're not
operative yet, and there are dozens of others)

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JamesPeterson
Wait. What?

In Australia, we have "EFT" - electronic funds transfer (between banks).
Typically, there's no cost and it's accepted between all banks. If you have to
transfer to another bank though, it _can_ take one business day.

We also have BPay, which is simpler and a little easier.

The USA seriously doesn't have these?

~~~
marcomonteiro
It does but it also requires the payee to give away personal information (e.g.
routing and bank account number). It also means the payer needs to get this
information before they can send money. This is essentially EFT payments but
simplified. Instead of needing banking information from the payee you can just
send it to them using their email address, phone number or Facebook.

~~~
JamesPeterson
Oh awesome. Thanks for clarifying :)

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tbeseda
My creating a dwolla account is a direct result of my interest in Bitcoin
exchanges. I wonder how many of their users have a dwolla account for this
purpose.?

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Stenerson
If the average transaction is $500 and they move $350MM a year, that's only
$175,000 in revenue. I know they are still a young startup but that's
certainly a less sexy number than the headline tries to imply.

Am I missing something?

~~~
Jyaif
Money isn't everything, I think he's more interested in changing the world:
those 2% banks take for every transaction is a relic from the past that still
exist because of a lack of competition, and the greed of those who dared to
compete. I am really impressed by this guy.

~~~
omarchowdhury
Those 2.0% the bank take for every transaction is because they own the
transaction network.

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secretasiandan
If they succeed, it will mean the financial transaction space is truly
becoming efficient. At $.25/transaction and an average transaction size of
$500, that means a charge of %0.05 or 5bps. Compare that to most credit card
companies that charge 2% plus a fixed transaction fee.

That also means their current run rate is $175,000/year which is not a huge
business.

~~~
hop
If it catches on in retail - like coffee shops, restaurants, etc..., I bet
that average will go far down. Sounds like the average is weighted towards
with the renters/landlords they have.

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xxbondsxx
That's awesome that Dwolla is moving 350 million a year, but I wonder how many
total transactions that sums up to. Since they're charging per transaction,
showing a net transfer amount doesn't really give any ideas about total
revenue or if they are profitable yet.

It's an interesting price model for sure, but I'm surprised they just didn't
do the typical "under-cut everyone else" strategy. It would be hard for me to
stomach seeing $1 million transfer through my system and only 25 cents getting
deposited in the company bank account. I mean that's a %0.000025 cut, and
since this service is so convenient, I imagine they could charge more.

Remember, things aren't priced at what they are worth but what people will pay
for them. Even a 0.5% cut gives you 5k on a million dollar transaction, and
that's still tons better than paypal.

~~~
rarrrrrr
From the article: "The average transaction volume for Dwolla is right around
$500 dollars. We move between $30 and $50 million per month."

So that's 60k to 100k transactions for $15k to $25k per month in fees.

~~~
xxbondsxx
Ah thanks, I missed that. So 180k a year? That's honestly not a whole ton for
a startup that big...

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thinkcomp
Dwolla is one of many companies violating money transmitter laws. Having a
bank processor as an investor does not make one exempt, nor is such an excuse
consistent with the fact that Dwolla had to register as a money transmitter in
Iowa.

Our formal complaint to the DFI is below.

<https://www.facecash.com/legal/20111102.dwollapacket.pdf>

As I've made clear in the past
(<http://www.aarongreenspan.com/writing/brown.html>), I'm not at all a fan of
the laws, but if I have to obey them, so should everyone else.

~~~
jacquesm
Aaron, I hold you in the highest regard, but this makes you look less than
nice.

Essentially what you have done here is rat out a competitor who _may_ have
broken a law (how do you know they have not registered?), presumably because
you are in competition, not because you are concerned for the well being of
your fellow citizens.

If you really are not a 'fan of the laws' and you are just mad at having to
obey them I think that you should stand up against those laws, rather than to
rat out those that break them.

It's like someone driving 55 Mph on the highway calling the police because
they're overtaken by someone else doing 60, after all, if you have to obey the
law so should everybody else.

Technically you're in the right, but this leaves me with a weird taste,
especially because you say you don't like those laws.

~~~
thinkcomp
Fair points, all.

The list of registered licensees is public...

<http://www.dfi.ca.gov/directory/mt.asp>

...as are lists of recent applicants (updated monthly)...

[http://www.dfi.ca.gov/publications/summaries/2011/september....](http://www.dfi.ca.gov/publications/summaries/2011/september.pdf)

[http://www.dfi.ca.gov/publications/bulletins/2011/october11....](http://www.dfi.ca.gov/publications/bulletins/2011/october11.pdf)

The complaint against Dwolla is one of 34 I have filed with the DFI. I don't
plan to file any more complaints, but I'm not done yet.

