
Dwolla: transactions under $10 are free - rarrrrrr
http://blog.dwolla.com/all-transactions-under-10-are-now-free-1-for-small-business/
======
patio11
For historical reasons, ACH is approximately as fast as airmailing someone
money. When all the stars line up correctly, it is as fast as Fedexing money.
Credit cards are like emailing money (and Paypal was, very explicitly,about
emailing money). Dwolla is based on ACH.

There's probably a lot that can be done with cheap, user-friendly ACH in an
API, but I don't know if folks really understand the "Your transaction takes
100 hours to settle" bit.

~~~
djb_hackernews
Isn't that the problem Dwolla is really trying to solve? Making ACH much
quicker than it is now?

~~~
wmf
But Dwolla is not in a position to either fix or replace the ACH system.

~~~
Tuna-Fish
> But Dwolla is not in a position to either fix or replace the ACH system.

On the contrary, based on the little PR that they have made, I feel that
replacing the ACH system is their primary desired endgame. They are actively
selling their payment network as an alternative to ACH for their member
institutions.

------
dmethvin
Based on our collective confusion it is clear that the number one obstacle to
using Dwolla is their own web site. When the "how it works" page starts with
_"First there was bartering, then there was coinage, and of course paper
tender followed with checks right behind."_ I'm fading fast.

I want a description of how a transaction goes down. I got that you set up
Dwolla by attaching to a bank account for ACH. I got that you use your phone--
_somehow_. Can anyone explain the somehow? How about sending cash to a friend,
is there any online demo of the interface for that?

~~~
mattmiller
I want to know this too. Also, does the consumer have to deposit money into a
Dwolla account before buying things? Can devs use there api with checking
account and routing numbers so that Dwolla is invisible to the user? Is there
a delay before payments post?

~~~
gibybo
You give Dwolla your checking account and routing numbers. They make two
random deposits of a few cents within a few days, then you go back to Dwolla
and tell them how much the deposits were for. Once your bank account is linked
to Dwolla in this way, payments to other Dwolla users are instant. It takes a
few days for them to withdraw from Dwolla into their bank account.

------
rgarcia
I've been following Dwolla for a while now, and I think this is a good step
for them. I still have two big concerns, though:

1\. Credit cards. Consumers like using them--they offer something that debit
cards don't: an "undo" option. Dwolla seems to have gone all in on pleasing
merchants, but I think there are still huge barriers to get consumers to use
their service. What's the value proposition? Why should I deposit money into a
Dwolla account when I can just swipe a card?

2\. This might seem petty, but their site needs a re-design. When it comes to
payments, your site needs to inspire confidence and trust. Compared to Square
[1] and Stripe [2], Dwolla's blog and main site all look like amateur hour.
Until recently their developer docs consisted of stickies in phpBB-esque
forum.

[1] <https://squareup.com/> [2] <https://stripe.com/>

~~~
wwweston
Can't see the phpBB-esque forum, so I'll have to take your word for it, but
I'm interested in hearing what elements of their current homepage seem
amateurish and what you think they're missing that would inspire trust.

------
bad_user
Tried registering - the 20 chars limit on their password field is not
mentioned. For a company that should be aware about security implications, an
upper limit should not be there.

Also, I connected my Facebook account from the start, so Dwolla should know my
country of origin before my attempt to register. However, only when I got
prompted for my address info (third screen) I saw the message " _U.S.
only...for now_ ", but hey, my city name got filled in.

And before that I tried looking around, going to their Help section, searching
- I found no mention of this US-only thing.

~~~
burgerbrain
What I have never understood is how password length limits come into
existence. Is there _really_ some developer out there who things long
passwords are bad? Are they using some sort of shitty technology that doesn't
permit it for some reason and are too lazy to get around it? I just don't get
it.

~~~
PotatoEngineer
Possibly a holdover from the old, bad days of storing passwords in plaintext
in the database, somebody said "nobody's going to need more than X
characters," and it became a hard limit.

And then, later, when we all switched over to storing hashes instead of
storing passwords, the idea of character limits never got quite all the way to
the front end. (I'm working on a system right now that has a 35-character
password limit. Granted, it's for mobile phones, where typing that much is a
huge pain.)

~~~
bad_user
Seriously, get rid of that limit - not all people type their passwords
manually.

For instance, I have an online password generator that does a HMAC_SHA256 from
a key + the domain name. I don't have to type the result - I just copy/paste
!!!

I also get pretty annoyed when the validation in place asks me to also put an
upper char or a number in it - as if a 15 chars password like that is any less
safer than a 70 chars password that's made of only dictionary words + padding,
which would be easier to remember but a lot harder to brute force.

Seriously, password validation these days is totally screwed.

------
thinkcomp
The question here is really "for how long?"

Ben isn't running a charity. If he thinks this strategy will help increase the
user base, he could be right. The only problem is that if that strategy works,
he'll be losing money on almost every transaction. (ACH transfers are cheap,
but they're not free.) Dwolla also has pretty limited fraud detection at this
point, and no bonds in most states to serve as nominal protection (see
<http://www.facecash.com/legal/brown.html>). So at some point the price will
need to rise again.

If the strategy does not work, then this will just hasten the company's
demise. There's a remote chance it could help catalyze an acquisition, but
that's really remote.

I then thought for a minute that perhaps this was a step toward operating
legally in states like Pennsylvania (see
[http://www.thinkcomputer.com/corporate/whitepapers/heldhosta...](http://www.thinkcomputer.com/corporate/whitepapers/heldhostage.pdf)),
which waives its money transmission regulations only if you do not charge a
fee (a la Venmo), but since you'd have to pay a fee at $10.01, that doesn't
make sense.

So honestly I'm not sure I get what's going on here.

~~~
pbhjpbhj
How long can they offer free micro- and mini-payments? (or should that be
midi-payments?)

Well the clue appears to be:

"Dwolla is not a feature, it’s a network… And on Dec 15th… Nothing will be
more obvious." (from [http://blog.dwolla.com/on-december-15th-dwolla-will-
change-a...](http://blog.dwolla.com/on-december-15th-dwolla-will-change-as-we-
know-it/)).

So "it's a network" is your clue to working out how they're being 'acquired'
and by whom. I'm going to go with integration in to Facebook because I have
absolutely no clue ...

Also, ACH transfer fees are presumably set by the bank at the terminal ends of
the transactions and so are likely, IMO, to be varied if the bank thinks that
they're being exploited to avoid other types of payment fees.

~~~
wiredfool
ACH fees are set by Dwolla's banks that connect them to the fed network. ACH
transfers tend to be free for the individual who is getting or sending money,
unless you have a bank that charges you per transaction. ( think bill pay, or
direct deposit).

While I don't know what rates Dwolla is getting, I'm going to guess that
they're under 10c per transaction, and they may be as low as 1-2 cents per. I
certainly hope they are for their sake.

What may save them a bunch, in cost and fraud, is if they can do the clearing
between their accounts internally, and not hit the ACH network for most
transactions.

------
vinhboy
I don't understand how this thing works. How is it different from paypal?

Someone at Dwolla should make a nice infographic explaining it. And a chart
comparing Dwolla to paypal, google checkout, etc...

The 25 cents flat fee is the big selling point, but its well hidden in the
support page.

~~~
hugs
1) How it works: Dwolla works by leveraging the Automated Clearing House (ACH)
system. But to do that, you have to link your Dwolla account to a checking
account. The ACH system is not the credit card system, so it can avoid the
requirement to pay a toll, and thus can avoid passing on those fees to their
users.

2) How is it different? Dwolla doesn't charge a percentage of the transaction.
They only charge $0.25. And now $0.00 for transactions under $10.

------
mc32
I imagine they have a mechanism to detect abuse? I.e. a $100 transaction
broken into ten $10 transactions to avoid the fee.

~~~
noahc
Why would you do this to save $0.25? So you're saving .25% a rounding error.
Most people have bigger fish to fry...

Oh, but what about scale? What if I'm processing 1MM a day? You negotiate a
new fee because you're xx% of their business.

For the little guys it's not worth the hassle, for the big guys it's probably
easier just to call them.

------
smackfu
My two questions are:

1) As a consumer, if I see a Dwolla payment option and a Paypal payment
option, why would I pick Dwolla?

2) As a seller, if I only have a Dwolla payment option, how many sales would I
lose?

~~~
simonhamp
2) Probably a lot to begin with. There is a perceived "security" in using
cards online (thanks to years of marketing and PR by issuers, authorisers and
gateways).

However, running Dwolla side-by-side with a card solution - with the reduced
price option - I think it will be surprising to see how many customers start
to see Dwolla as the favourite.

The trick is to create that difference for customers to see. And remember...
just because your cost per transaction may go down, doesn't mean your prices
have to! Why not use it as an opportunity to stick card fees on top?

I'm sure that will give customers plenty of incentive to the point where it
makes no sense to use a full-time payment gateway... just stick Paypal's
'free' web payments solution on there to catch the drifters

~~~
alsocasey
Is this not in violation of the seller's merchant agreement though?

------
kgtm
_Do my _users_ need to be in the USofA to enjoy Dwolla?_ [0]

 _> Currently yes. We are exploring which market to enter next :)_

Not a criticism, just a heads up for developers not targeting solely USA
clients...

[0]
[http://getsatisfaction.com/dwolla/topics/do_my_users_need_to...](http://getsatisfaction.com/dwolla/topics/do_my_users_need_to_be_in_the_usofa_to_enjoy_dwolla)

------
sgornick
What's the quickest way to load funds to a Dwolla account?

If you already have bitcoins, then you simply trade them for USDs on an
exchange such as Intersango.com or MtGox. Then withdraw those USDs to your
Dwolla account and the funds are available for spending right away. From
bitcoins to Dwolla USD, in a matter of minutes -- even including the time it
takes to sign up for Dwolla!

If you don't already have bitcoins, you can probably find someone willing to
trade their Dwolla funds for your PayPal funds. The #bitcoin-otc marketplace
has traders who have Dwolla USDs but for whatever reason need to move those
funds to PayPal. Oftentimes they will accept a 1:1 trade (e.g., your $50
PayPal buys $50 Dwolla USD.) <http://bitcoin-otc.com>
<http://webchat.freenode.net/?channels=#bitcoin-otc-foyer>

------
nchuhoai
Interesting article that was on HN earlier I think:

[http://www.sfgate.com/cgi-
bin/article.cgi?f=/g/a/2011/11/10/...](http://www.sfgate.com/cgi-
bin/article.cgi?f=/g/a/2011/11/10/businessinsiderthis-28-year-old-
is-.DTL&ao=2)

~~~
billswift
Also
[http://www.fool.com/investing/general/2011/11/25/in-2015-wil...](http://www.fool.com/investing/general/2011/11/25/in-2015-will-
credit-cards-and-banks-cash-in-on-bl.aspx)

------
mncolinlee
Based on earlier comments by their founder, I imagine it's only a matter of
time before they compete directly with credit cards using NFC. He's suggested
that their goal is to compete directly with credit card companies like Visa.

Dwolla is currently making most of their revenue and customers from large
landlords on rent payments. If Dwolla can produce an NFC badge or keychain
(until NFC catches on in more phones) and can somehow become synonymous with
NFC payments before the credit cards become big there, then I can see a huge
market opening up for them. Vendors hate transaction fees and customers love
convenience.

------
dholowiski
Sigh... US Only... as usual...

------
nchuhoai
Does anyone know how hard it is to spin up a service like this on their own?
Given they use relatively cheap ACH transfers, wouldn't you just need to find
a bank that manages the money for you, and the rest is just doing a bunch of
those ACH transfers?

Also, I'm not very familiar with US banking system, but it seems as Dwolla can
withdraw funds from your account after you "verified" the account. It's a
pretty common thing in Germany, but I have never heard of that in the US. Can
any business do it or is it a Dwolla-specific thing?

~~~
thinkcomp
I run FaceCash, which is based on accounting software I already had started
writing ten years prior to starting in with payments. It's pretty difficult.
Between the technology, regulatory and accounting hurdles, it's not a business
for the faint of heart.

------
jarin
I like what Dwolla is doing, but unfortunately without a faster way to move
money out of Dwolla (transfer to PayPal, debit card, etc.) it's pretty useless
for me right now.

The devs have told me that's completely against all they stand for, blah blah,
but I think if they're trying to take down PayPal and the credit card
companies they really need to budge a little bit to make the transition more
palatable. I don't mind eating transaction fees until I can get some clients
to use it.

~~~
sgornick
Since Dwolla funds are kind of like cash, it is much easier to move them to
something like PayPal.

This conversion happens frequently on the #bitcoin-otc marketplace as those
selling bitcoins end up with excess Dwolla USDs. At the same time, there are
others needing Dwolla USDs to buy Bitcoins, and will pay using PayPal USDs.

    
    
      http://www.bitcoin-otc.com
      http://webchat.freenode.net/?channels=#bitcoin-otc-foyer

------
fossuser
Is Dwolla a competitor to <https://www.simple.com/> ? I'm not sure exactly
what their service does - I know it's different than paypal and google
checkout from previous articles. Can you use it to pay at brick and mortar
stores like a debit card? It seems like it would only be useful if all
merchants already accept it. Am I missing something or can someone explain it
to me better?

~~~
thinkcomp
No.

Simple provides an alternative on-line banking front-end through agency
agreements with banks.

Dwolla provides a mobile payment service and Bitcoin routing services.

~~~
fossuser
Thanks - so essentially they're just a better digital currency exchange
platform? Better pricing and more features, but still have to build up their
network of people who accept their transactions?

~~~
thinkcomp
Yes, they're one of our competitors in that space, and everyone faces the same
challenge getting started, plus regulatory issues.

------
epscylonb
And this is unrelated to their upcoming big announcement on the 15th, there
has been speculation that they will start accepting bitcoin.

~~~
jpdoctor
That would take them out of my "take a look at these guys" column, and put
them squarely in the trash-bin.

Why a payment company would spend time on a currency with built in deflation
is beyond me. You might as well go do a payment-in-gold startup.

~~~
jarin
Bitcoin is squarely at the bottom of the dip in the Gartner Hype Curve right
now. It's a little bit of a gamble, but it could pay off. The risk to Dwolla
of facilitating Bitcoin transfers is pretty minimal.

~~~
jpdoctor
> Bitcoin is squarely at the bottom of the dip in the Gartner Hype Curve right
> now.

Similarly, the Gartner hype curve is at the peak of the Gartner hype curve.

Gartner doesn't change the fact that bitcoin is deflationary and will die as a
currency for the same reason that precious metals died: They are deflationary.

~~~
keen
> bitcoin is deflationary and will die as a currency for the same reason that
> precious metals died: They are deflationary.

Precious metals are no longer used as money because of deflation? Care to
justify that?

Are you sure it wasn't due to the numerous benefits of fiat money? (Not to say
that fiat is perfect.)

~~~
ars
I assume he means paper money backed by precious metals.

And yes, being deflationary is why that is no longer done.

The amount of paper money in the world should equal the amount of resources.
If it doesn't you have deflation and all sort of trouble.

~~~
ithought
This is highly inaccurate.

You guys are referring to Gresham's Law which is only applicable due to legal
tender laws. Without legal tender laws, the "good money" wouldn't be driven
out by the "bad money" (i.e. US currency).

Also, the reason the US government went completely off the gold standard in 71
was to increase deficit spending without having to pay our debts in gold or
something of real value. The Fed has a policy of steady inflation, only
through debt liquidation can we ever expect to pay off the huge amounts we
owe. That is, we borrow 10 trillion and inflate 50% over a certain time, now
we only owe 5 trillion.

End the legal tender laws, allow alternative commodity-based currencies and
end the central planning of interest rates. This is the solution. It has
nothing to do with gold (or Bitcoins) being a deflationary currency. It has
everything to do with big corrupt government.

edit- I don't want that last sentence to color my whole statement. I'm an
Austrian, not a Republican. I worked for Obama last time and will vote for him
again. For a better perspective on this, check out (future Fed Chairman!)
James Grant's Interest Rate Observer <http://www.grantspub.com>.

------
hugs
This could be a boon for taxi drivers. They _hate_ credit card fees,
especially for quick trips that are <= $10.

~~~
ars
Yah right that I'm going to give a taxi driver any access to my debit card,
even indirect access.

------
treelovinhippie
Still only available for US bank accounts :(

I'm in Australia, any way to easily/cheaply open a US bank account?

