
Dwolla Raises $16.5M from Andreessen Horowitz - mschonfeld
http://blog.dwolla.com/coast-to-coast-with-andreessen-horowitz/
======
marknutter
So I tried Dwolla last week to pay somebody back for some concert tickets and
it was not a good experience. I, naively I suppose, thought that maybe Dwolla
had come up with some clever new workflow for on-boarding people you wanted to
send money to. Alas, I got a few angry texts from the person complaining about
having had to input their social security and bank account numbers and, after
feeling uncomfortable about having done that, not knowing how to cancel their
account. The transaction did eventually go through after I convinced them to
be patient, but it's not a rousing endorsement of the platform.

I echo some of the other concerns in this thread that there just may not be an
easy way to transfer money to people given all the security concerns. I still
far and away would prefer to have my bank send a physical check to somebody I
owe money too because at least that doesn't require them divulge sensitive
information to an entity they don't know.

~~~
jessedhillon
Capital One 360, formerly ING Direct, has nailed this on the sending side. The
sender needs to know the recipient's email addr and the last four of their
bank acct # -- the recipient will receive an email which takes them to a page
where they enter the full account # and, if those match, money transferred.

~~~
abawany
SSN to receive money from Dwolla!? Holy cow. Yes, I like the ING solution very
much as well though for repeated (but not recurring) transfers, the need to
re-enter the bank account number gets a bit cumbersome.

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dkhenry
Hopefully they can use some of that money to safeguard my information since
they refuse to delete it from off there servers. Or alternatively they could
use that money to issue their federally mandated privacy statements that they
refuse to do.

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moonboots
As a developer, the biggest concern I have with Dwolla is the initial friction
for new users, e.g. entering their bank account number. I would like to see
the complete end user signup flow featured more prominently. I didn't see
anything on the topic while signing up for a developer account.

Criticism aside, I'm definitely rooting for Dwolla. I don't think they need to
match the comparative ease offered with credit card purchases, but they need
to be in the same ball park.

~~~
pc86
I've considered using it to have clients pay me because the only other options
are to give away 3% to CC processors, or wait a week+ for a check to come in
the mail.

If there was a way for me to pass new client onto a single sign-up process
(whether I built it via an API or whether it was on Dwolla's page and tracked
via referrer), that would go a long way to convincing some of them to use it.

~~~
brandall10
Just an FYI, if by clients you mean for consulting work, Freshbooks has an
arrangement w/ Paypal (yeah, I know) where payments are a flat $.50 (yes, 50
_cents_ ) for all invoices up to $10,000. You will still have to put up with a
wait to get that money in your bank account (3-4 business days if payment is
immediate), but it can all be handled online. I've had all my payments over
the past year go thru Freshbooks and the lifecycle of invoices/payments is
tracked in their system.

~~~
toomuchtodo
Thank you for this contribution. My business uses Freshbooks, and I was
unaware of this.

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ChuckMcM
Nicely done. I really love the mission, driving the payments market to be
being brutally efficient. Some nasty brutes[1] on the other side of the fence
but they can be contained.

[1] Various established payment processors who would have you believe that if
you aren't related by marriage to the CEOs of the big banks on Wall Street you
will be killed.

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nym
How is Dwolla better than bitcoin? It seems like it has the same drawbacks of
credit cards (chargebacks), without very much benefit.

Maybe I'm missing a killer feature, but Dwolla doesn't seem all that
interesting, just another paypal competitor.

~~~
reaclmbs
Dwolla better than Bitcoin? Way, way better marketed. Better UX.

Dwolla can improve its tech stack and have it be the UX layer on top of
Bitcoin if it chooses. I guarantee you there are folks at Dwolla working on
this. Dwolla = front end of payment protocol. Dwolla = bank?

Competing payment protocols = Bitcoin; Bank routing/Swift + Forex. There were
efforts to abstract gold into a payment protocol in the 90s but they failed.

Bitcoin or one of its numerous derivatives (feathercoin, litecoin, terracoin,
ppcoin, ixcoin, novacoin, namecoin, freicoin, "govcoin") will likley win as a
payment protocol.

The bitcoin investors have zero incentive to spend the money marketing it and
building a sexy interface on top of it. There is money in interface.

BTW, a paypal competitor IS interesting! It's a 10bn+ market. but dwolla could
be the "bank". it could be the secured storage. ....

note: andreesen has also invested in ripple/opencoin. reminds me of their
simultaneous bets on dalton cadwell (immeem)'s picplz, and instagram.

~~~
Jd
Andreessen Horowitz just put a lot of money into OpenCoin/Ripple, I guarantee
you they are going to knit the two services together. Dwolla w/ happy PR buzz,
back end provided by OpenCoin.

~~~
techbody
A lot of money? They only raised $1M - so how much could have they put in?
Dwolla raised $16.5 with AH leading.... Probably a check of $10M or more...

~~~
Jd
I thought it was an "undisclosed" amount

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white_devil
Didn't a few people voice their concerns with Dwolla recently on HN? Something
about trouble with getting their money?

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notatoad
i think the general consensus there was that signing up for a service and
immediately trying to transfer $40k was a bad idea.

~~~
benatkin
That was part of it. The main takeaway for many is that Dwolla is super
friendly until you actually need to get your money out of it. I tried to get
my $18 out of it but they insist on giving them a scan of my drivers license,
a requirement that they didn't have at the time I signed up.

~~~
jyu
When the entity is defined as a money transmitter, you need to abide by their
legal requirements. One of those includes having photocopies of government
issued id. They choose to lower the initial barrier to sign up at the expense
of a bad one time user experience for getting the money out.

~~~
dangrossman
Dwolla does not call itself a money transmitter, and is not licensed as one.
Many people feel they're wrong, but to every state that's inquired, they've
argued that they're only acting as an agent for the recipient of money, and
are not transmitting money themselves.

~~~
jyu
Wow, good point, faulty assumption on my part.

Here are some further details on their stance:

Dwolla does not receive, hold, or transmit User funds; Dwolla only maintains
and manages information associated with User ownership of the funds; (3)
Veridian is the entity that provides money transmission services upon
instructions issued through the Dwolla software platform; and (4) Funds in the
Veridian Holding Account are held in a pooled account.

Veridian, a major investor and bank processor manages the funds. In other
words, all funds withdrawn from a user’s bank to be put into their Dwolla
Account is placed into the pooled Veridian Holding Account. This legal
loophole allows Dwolla to operate outside the state of Iowa, since it is
technically never a money transmitter, merely a service provider for a
processor, and therefore not subject to the expensive registration and
licensing process.

<http://sites.tufts.edu/costofcash/2013/03/27/dwolla/>

~~~
thinkcomp
This is nonsense. Although I'm not a lawyer...

Dwolla is a money transmitter according to most (if not all) state statutes.
Its relationship with Veridian does not satisfy any statutory requirement
necessary for exemption. Veridian itself does not have a charter, and is not a
credit union. In my personal opinion, Dwolla has been breaking laws since day
one and continues to. Its investors are no different.

~~~
walkon
Veridian is indeed a Credit Union and a member of the NCUA.

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shawnee_
_Mission: Allow anyone [or anything] connected to the internet to move money
quickly, safely & at the lowest cost possible._

Fantastic mission statement: clear, concise and it sounds almost impossible to
do.

Although they didn't like my take on it when I was at a certain unmentionable
payments company, it was my intuition several months ago that a price war is
_inevitable_ in this space. Whatever company initiates it will be the one that
gains enough momentum from the tail to scale efficiencies best. Namely: any
and all efficiencies that are "left over" after price for fellow companies in
the space to compete on (great support, a beautiful API, etc.) Dwolla's
aggression here shows that they understand the future of money transfer.

~~~
mkoble11
_Fantastic mission statement: clear, concise and it sounds almost impossible
to do._

It seems like people really get behind startups with the biggest, craziest
visions....it almost serves as a built in rallying cry.

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benigeri
I wonder if A16Z used Dwolla to send Dwolla their many millions of dollars.

~~~
sjtgraham
That would be cool

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rdl
Ending the 3% tax on transactions (which ends up being what, 5-10x on the
year, due to multiple transactions with the same dollar?) would be a huge
boost to the economy.

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platz
Will Dwolla bring back support for bitcoin transactions?

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mschonfeld
Dwolla never had native support for bitcoin transactions. We've always been
used as a gateway between USD -> BTC by exchanges such as MtGox, BitInstant,
etc.

This is still the case, and is still very much possible and active.

~~~
platz
Sorry, I should've been more clear; I didn't intend to talk about native
support. I was referring to the "gateway" service explicitly. The only reason
I brought this up was because Dwolla was missing from BitInstant last week,
but now Dwolla appears to have resurfaced back on BitInstant's form.

~~~
mschonfeld
Right... I've been working with the BitInstant guys to bring back Dwolla
support, and make it better than before :)

