This article was posted a few days ago. I'm a competitor.
Having built the same kind of company from the ground up, I have good reason to suspect that most of Dwolla's transaction volume does not come from mobile payments, if the $350 million / year number is accurate in the first place. Some revenue comes from Bitcoin transactions, which the article doesn't mention, creating the false impression that Dwolla is already a mobile payments juggernaut. It isn't.
Dwolla does not integrate with any point of sale systems to the best of my knowledge, which means that the title of this article is basically fantasy.
Dwolla is also breaking California law by operating in a manner that allows California users to use the service without a money transmission license. (Having an investor that processes transactions for banks does not make Dwolla exempt. Anyone who doubts this should read the list of exemptions: http://www.leginfo.ca.gov/cgi-bin/displaycode?section=fin.... If Dwolla were considered a bank it wouldn't need a money transmission license in Iowa, which it has.)
I'm not a fan of that law, so as of yesterday I've sued the State of California over it.
Dude, give them some credit for moving $1M per day without even integrating with POS.
You CANNOT build a billion dollar company without breaking laws knowingly or unknowingly.
EDIT: Please don't take this as an insult, but you seem to have a negative attitude when it comes to competitors. I noticed this a few times. This makes you sound jealous (maybe you aren't, idk) and devalues your comments.
EDIT2: And they have done this with $1.3 M in funding, and 12 people. Hats Off. Hats Off.
I follow Bitcoins, in the matter that some people might follow Nascar crashes, and it is not credible to me that Dwolla is primarily getting those volumes on Bitcoin transactions. First, the Bitcoin community is, on the observable evidence, not large enough to support them. Second, my understanding is Dwolla belatedly discovered the value of chargebacks, which bit the Bitcoiners because of all the obvious reasons.
Do you have a source for your claim that users are transacting over $500,000 per day on Dwolla for Bitcoins?
Dwolla's entire purpose is not to use the traditional POS systems. However, they could certainly create their own inexpensive POS device with no interchange fees or use a cell phone.
Glad to see you sue over unjust laws but no need to bash Dwolla. The service is unbeatable compared to any other way to transfer large amounts of money.
I'm from Des Moines and know a couple of people that work at Dwolla. I haven't heard anything about Dwolla doing a lot (if any) bitcoin transactions. Do you have a source on that?
Dwolla has an API so any point of sale system can integrate with it if they so choose, but I believe that most retail locations that accept Dwolla either check the dwolla website, iphone or androids apps for incoming payments.
In Germany (and most of europe) credit cards arent used very much. I can wire transfer money inside the country for free, i can pay in alot of Online Shops by direct debit who get the money directly from my bank account. In stores i use a card associated with my bank account (not a credit card) to pay which also lets the merchant get the money directly from my bank account.
I am suprised that the US doesnt have a similar system, no wonder everyone uses credit cards there. Thats also why i think Square wouldnt be very successfull over here.
I use my credit card for almost everything. Before I explain why, it's important to state that I pay my balances in full every month. Anyone who has a hard time doing so should not be using credit cards.
There are three reasons why I use my credit card so much (in order of importance to me):
1: It makes my finances much, much easier to manage. If I were using a debit card, I would have to track every transaction to the penny throughout the month in order to avoid overdrafts. Instead, I just keep a rough mental tally of my expenditures to make sure that I'm not living beyond my means. If my spending happens to get front-loaded on any particular month, no big deal: I've got another paycheck coming before the bill is due at the end of the month. With a debit card, I would have to manage my spending by pay period (twice a month) rather than billing cycle (once a month). Also, if I did happen to spend a little bit too much by accident, I'm looking at a few dollars (possibly even just a few cents) in finance charges, as opposed to a $20+ overdraft fee on every subsequent transaction.
2: I have a rewards credit card, so everything I buy gets me points. If you aren't using a rewards credit card, you're helping to pay for my rewards: the credit card companies generally charge the merchants higher transaction fees for purchases made with rewards cards (otherwise they would lose money on people like me who don't carry a balance). Merchants pass those costs on to customers by raising prices slightly. If you're not using a rewards card, you're paying those higher prices without reaping the benefits. Some merchants charge lower prices for cash, in which case I will usually pay cash because the savings are worth more than the points.
3: Because I pay my balance in full each month, I'm getting an interest-free loan from my bank each month. That money sits in my bank account accruing interest for anywhere from 1 to 30 days (depending on when I make the purchase). With interest rates as low as they currently are, I'm only making a few cents each month this way, but that's still money I wouldn't otherwise have.
How many of these reasons would also apply in Europe? I know that #1 does, but what about #2 and #3? There are plenty of reasons for not using credit cards, which I didn't really get into, but are there reasons that apply in Europe which don't apply in the US?
The US has debit cards. These act exactly like the card you describe. The problem with debit cards is that the money leaves your account immediately. I prefer having the CC buffer for when (notice not IF) the card number is stolen.
We can use debit cards here as well, the reason we generally don't are usually because of the security and benefits (mileage) you get from using a credit card.
Yes true. I always wonderd why americans used these stupid credit cards all the time.
We a better System atm but we should not relatx. They need to start making paying on the internet easier, Credit Cards and Paypal get alot of money by offering shitty servises. The Banks should get into this field and make it easy, safe and free.
A lot of us are actually using "virtual credit cards". They are like debit cards tied to a secondary account. You transfer money to said secondary account through the bank's webpage and then the credit-but-it's-actually-debit card is used to draw directly from it. This way, when you give your "credit" card online, even if it gets stolen, your main account is left unaffected.
Depends. In Ireland, credit cards are popular due to the main debit card not being accepted a lot abroad, since it's a small country, with a large economy next door that speaks the same language, it's common to buy things online from the UK, and so you'll need a credit card.
I wish him well on his endeavor because I'm not a fan of CC fees, but from a consumer standpoint, I don't see any benefits. CCs provide (i) a line of credit, (ii) fraud protection, and (iii) rewards/bonuses. All of these can be incredibly valuable, particularly (ii) - you never appreciate the no-liability fraud protection of a CC until you discover how difficult it is to deal with situations in which your bank account is affected.
If credit cards were not already the dominant electronic payment mechanism (i.e. VISA/MC were just starting like Dwolla is), Dwolla could possibly win out because businesses could refuse CC's. Not going to happen now, at least with regards to business-to-consumers. And I don't think most B2B transactions were conducted through CC's anyways.
They seem to be doing okay now, but I don't see any secret sauce that's going to make them anything more than a fringe player in the payments industry.
Yes. The fraud protection and line of credit are valuable to people but why is that linked to the processing fee and network? Those features are provided by the bank which only provide them irrespective of the network your purchases are processed on. That is the key.
The main advantage with a card is you can pay with it anywhere in the world. That kind of scale takes a lot of time to achieve and that is the reason the whole ecosystem is milking users.
Isn't it really easy to steel somebodys card? Isn't credit card theft a big problem in amerika? Dept cards are protected with a code so there not that easy to steal.
Im from europe and this is just how it is in my view of the Amerika but I draw my knowlage from movies and stuff so correct me.
Credit cards exist because people need a line of credit and debit cards seem to offer the same benefits as Dwolla, at a lower interchange rate for the merchant. The P2P feature is nice, ACH generally isn't used directly by individuals and wire transfers/EFTs can be quite expensive.
I wish someone would make a real alternative credit processing network, but there are so may laws and regulations, I wonder if it is even possible to ever have something like a simple 1% transaction charge.
No, credit cards exist because in 1978 the Supreme Court released an opinion allowing banks to export interest rates from one state to the other. So a bank in a state with a 25% interest rate cap could lend to a family in another state with a 12% interest rate cap. Politicians figured out quickly that if they bumped up the credit rate ceiling in their state that the financial institutions would come running, cash in hand.
Thirty(ish) years later we have an insidious industry that has saturated US culture with the poison of unsecured credit. They set up stands at colleges, snaring college freshmen with offers of free tee-shirts. They sponsor educational curriculums in grade schools advocating the use of credit cards. They even kick money to toy makers to include a little "Visa" or "Mastercard" with their products. They lobby Congress to pass laws making it harder for people who've dug themselves into a hole to include credit card debt in bankruptcy.
Credit is not necessary for modern living, despite the propaganda that permeates every piece of media to which we have access. I know this because 18 years ago I was that ignorant kid that wanted a free teeshirt. Ten years ago I quit using credit as a means of purchase, and six years ago I made my last monthly payment (with the notable exception of student loans, which is a rant for another day).
Credit cards exist because it used to be very difficult to check the balance of an account in realtime during transactions. This is no longer an issue.
It's true that some people need to purchase items on credit but the reason that they're so popular now is less to do with having a line of credit and more to do with the legacy of the technology.
If you're doing it right then your credit card account should be earning you the approximate equivalent of 1% cash back via rewards points or another mechanism. For my personal card I use Chase Sapphire (the one without the yearly fee), which gives 2x points for all dining purchases. Always confuses me when I see people using cash or debit cards. At my current rate of spending I could get a free iPad and a few other goodies every year by doing nothing more than not bothering to carry cash. In fact, merchants have to increase their prices slightly to account for the transaction fees, so anyone using cash is actually (in a small way) paying for my rewards.
Also, debit cards pay straight out of your regular bank account. With Dwolla, funds come out of your Dwolla account and it takes 2-4 days or longer to move funds into that account. It's an interesting concept but with delays like that I don't see how it can compete with plastic. Too bad, card processing fees are outrageous!
At 40MM/month, with average transaction of $500, and a $0.25 fee for each transaction, they make $20,000 per month revenue... After you pay employees (12 people), other costs (including legal), and take a hit from fraud, I can't imagine there is a great upside to this business unless they start doing at least 100x more volume. Concidering the nature of the business, I don't see this happening.
Using my awesome math skills, it would take 4 million transactions/year to break $1MM in revenue. Or roughly 11K/day, 460/hour. That's easy, if they can grow their user base.
Being disruptive doesn't matter at all if you cannot remain solvent so looking at those numbers, they have got to be whXXXng themselves out to their investors.
Begs the question - why are wire transfers so expensive in the US? Most banks here charge $25 (and also make it difficult to execute online), yet you can send a check for free. Doesnt make sense.
The only sensible application I've seen is ING's person2person payment application that allows an ING customer to transfer money for free to anyone with an email address. The recipient just has to enter their bank's ABA number and account number.
I don't know about you, but I'm not generally keen on giving my account number to someone so they can wire me a few bucks. That's rather error prone and a little shaky on the security side. It can also be rather expensive, depending where you're sending to/from.
There's a lot of talk here on how credit cards trump every other form of payment, on credit lines and rewards. Americans love their cards:
* 1.4 billion credit cards held by U.S. consumers
* Average credit card debt per household with credit card debt: $15,799
* Total U.S. consumer debt: 800 billion (down from ~1 trillion in 2008)
Yeap, look at that debt, credit cards are amazing.
Let me put my f___ the system hat:
1. $2 trillion in transactions per year.
2. Merchants pay between 2-4% in fees for every transaction
Many people seem to forget about the second - "I'm not paying any fees" :/.
That means around $40 billion in fees per year. A few billion short of the national budget for the US Department of Education. I really, really doubt it's costing all this money to send and track (mostly virtual) money around. And we haven't taken into account the late fees (around $20b/year), overcharge fees, annual fees, banking fees and others.
Credit cards are just money harvesting machines.
Why exactly do we need a third-party to handle our payments? Banks own our data and most of the infrastructure. Electronic payments should be part of the basic account package. "Reward" cards are just another marketing gimmick to get you to use more cards.
/hat off
Cutting myself short, I'm extremely excited with what Dwolla/Square and others are doing. It's 2011, I want to make payments with my eyes!
I'd never written a cheque until I moved to the US; I was pretty shocked at how backwards money transfer is here. In Australia, BPAY (http://en.wikipedia.org/wiki/BPAY) is pretty much how all utilities and services are paid for. Transactions between individuals are usually via standard wire transfer and are free, and often instant.
When I use my credit card to pay what I normally have to pay for each month (groceries, utilities, etc) I get money back (yes, a check in the mail). Dwolla can't beat that.
When I buy electronics with my credit card, I get an extra year of warranty, and buying protection. Dwolla can't beat that.
When I travel, or rent a car, I get insurance coverage with my credit card. Dwolla can't beat that.
When I buy anything with my credit card, and something goes wrong, I lose no money. None at all. Dwolla can't beat that.
I'm using Chase QuickPay to pay my rent. No fees for either of us and it works great, I don't even have a Chase bank account, but quickly set up an account and linked it to my BofA account. Only problem is I believe the daily limit for payments is $2,000.
From this example, clearly some banks are figuring out how to sidestep the credit card companies and provide value. How would this and other similar products like the ING product not be serious threats to Dwolla?
Issuing banks (the bank name on your credit card) get the majority of the credit card fee revenue, visa/mastercard and the requesting merchant bank get considerably less.
I got the opportunity to listen to Ben speak at Startup Weekend Des Moines and I have to say I'm really impressed with him. Regardless of Dwolla's future (personally I think they will transform the industry), Ben is a shining example of working hard and being a successful entrepreneur in a place that really isn't very supportive of people who think differently. There are now a few legitimate VCs, college courses, and frequent startup events in the Des Moines area and every single person I've talked to gives a lot of credit to Ben for helping that grow. Des Moines even just recently launched one of their first incubator programs (Startup City) and is seen as a legit player in the Silicon Prairie. My team at Startup Weekend Des Moines (Fundle.co) revolved does group payment systems and Ben brought his team from Dwolla to meet us and offer their expertise for coding the backend payment processing part of it. Even if they don't kill the credit card, Dwolla deserves a lot of respect for helping to jump start the entrepreneur community there.
In Finland, account-to-account wire transfers are practically free and there are two internet buying options in general use that rely on them alone.
First, most internet shops can do what the mail order companies have done for decades: they send you the product along with a bill that you can pay with a wire transfer. These days it means you go to you internet banking site and issue the transfer directly from your account to the merchant's account.
Second, a majority of big merchants provide "internet banking payment" where the merchant's site is linked with the top ten major banks' internet services. From the merchant's site you choose your own bank and they will redirect you to the online banking services of that bank, along with the amount they want to charge and some other metadata. Now, your bank will ask you to login to your own internet banking account and use it to authorize a wire transfer for the given amount. After that's done (securely, on the bank's own website), the bank will redirect you back to the merchant's site, again with a token that the merchant's software can use to verify that the transaction went through.
Also debit cards are in high use: they are usually free to obtain as well and it costs a merchant much less to charge a debit card than a credit card. This is sort of related because debit card transactions are practically just wire transfers. Some of them, such as Visa Electron, will actually require an online connection to your bank so that the balance can be checked prior to the wire transfer.
It all comes down to the fact that Finland's banks have been historically well interconnected and they also have a long history of electronic inter-bank transactions. Wire transfers have been a commonly supported and cheap way to transfer money since the 80's: also private individuals can use them to move money to each other free of charge. Further, wire transfers are immediate between accounts in the same bank; between two different banks it takes one night to get them cleared.
Maybe the current downturn (bankruptcy filings, closing of CC accounts)is forcing people to start using cash instead of credit. I am a cash person myself, but asking people direct access to their bank accounts would be a hard sell, at least with credit cards there are many situations where they would allow chargebacks. They will have a niche market of cash based merchants, that is for certain. But it is way too early to say that their system can make credit cards obsolete within the next few years. Credit cards are just becoming popular in emerging markets where eCommerce is relatively nascent. The real issue now is securing cross border and long distance payments, being able to provide an unprecedented level of security demanded by the globalizing peer-to-peer and business-to-business transactions.
I don't know about in the US but I regularly transfer money througgh email with an ING Direct canadian account. I know other financial institutions here have similar functionality.
Where we've seen a ton of transactions right now is with people paying monthly rent.
I don't understand this. Perhaps it's an American thing, but here in EU, I just put my landlord's account numbers into my online banking and I can transfer them money for essentially free. I even set up a standing order so it'll pay the same amount at a fixed day per month. I don't have to worry about paying rent. How does a landlord accept money via their credit card?
It really surprises me how many nay-sayers have posted negative comments, here. Bottom line is that, because of the popularity of paying with credit cards, merchants have to pass on the cost of transaction fees to consumers. Consumers pay. Will your reward points make up for the increased prices that you unwittingly pay? I doubt it. Even if Dwolla isn't the one to do it, toppling credit card profits is in everyone else's interest.
Why are merchant credit card fees somehow different from all the other costs that merchants silently pass on to the consumers? Costs that the merchants choose to pay in order to get more sales?
I don't see giving direct bank account access to any third party plus from my own customer point of view, both VISA and Mastercard have worked well for me in pretty much all situations in a lot of different countries all over the world.
If it can bring down the credit card transactions costs then great but other than that, I see no reason to move to bitcoins or dwolla because I see not a single benefit for me. Maybe it is great for you USA hackers but here in Europe... shrug.
As a customer, I prefer: http://venmo.com
Lets me easily pay my friends and vice versa, 100% free, no transaction charges.
Funds get pulled out of my credit card like a regular purchase (OR out of debit card or checking if preferred)
Funds paid to me get automatically deposited into my checking account.
Usage is effortless.
They make money by charging a percentage on transactions that businesses receive.
[+] [-] thinkcomp|14 years ago|reply
Having built the same kind of company from the ground up, I have good reason to suspect that most of Dwolla's transaction volume does not come from mobile payments, if the $350 million / year number is accurate in the first place. Some revenue comes from Bitcoin transactions, which the article doesn't mention, creating the false impression that Dwolla is already a mobile payments juggernaut. It isn't.
Dwolla does not integrate with any point of sale systems to the best of my knowledge, which means that the title of this article is basically fantasy.
Dwolla is also breaking California law by operating in a manner that allows California users to use the service without a money transmission license. (Having an investor that processes transactions for banks does not make Dwolla exempt. Anyone who doubts this should read the list of exemptions: http://www.leginfo.ca.gov/cgi-bin/displaycode?section=fin.... If Dwolla were considered a bank it wouldn't need a money transmission license in Iowa, which it has.)
I'm not a fan of that law, so as of yesterday I've sued the State of California over it.
https://www.facecash.com/legal/brown.html
[+] [-] rokhayakebe|14 years ago|reply
You CANNOT build a billion dollar company without breaking laws knowingly or unknowingly.
EDIT: Please don't take this as an insult, but you seem to have a negative attitude when it comes to competitors. I noticed this a few times. This makes you sound jealous (maybe you aren't, idk) and devalues your comments.
EDIT2: And they have done this with $1.3 M in funding, and 12 people. Hats Off. Hats Off.
[+] [-] patio11|14 years ago|reply
[+] [-] dethink|14 years ago|reply
Dwolla's entire purpose is not to use the traditional POS systems. However, they could certainly create their own inexpensive POS device with no interchange fees or use a cell phone.
Glad to see you sue over unjust laws but no need to bash Dwolla. The service is unbeatable compared to any other way to transfer large amounts of money.
[+] [-] viggity|14 years ago|reply
Dwolla has an API so any point of sale system can integrate with it if they so choose, but I believe that most retail locations that accept Dwolla either check the dwolla website, iphone or androids apps for incoming payments.
[+] [-] seiji|14 years ago|reply
• Are you suing them without a laywer? Everything looks to be directly from you to Somebody Important.
• Why are so many people CC'd on your emails?
[+] [-] knodi|14 years ago|reply
[+] [-] JoshTriplett|14 years ago|reply
[+] [-] kayoone|14 years ago|reply
[+] [-] lucasjung|14 years ago|reply
There are three reasons why I use my credit card so much (in order of importance to me):
1: It makes my finances much, much easier to manage. If I were using a debit card, I would have to track every transaction to the penny throughout the month in order to avoid overdrafts. Instead, I just keep a rough mental tally of my expenditures to make sure that I'm not living beyond my means. If my spending happens to get front-loaded on any particular month, no big deal: I've got another paycheck coming before the bill is due at the end of the month. With a debit card, I would have to manage my spending by pay period (twice a month) rather than billing cycle (once a month). Also, if I did happen to spend a little bit too much by accident, I'm looking at a few dollars (possibly even just a few cents) in finance charges, as opposed to a $20+ overdraft fee on every subsequent transaction.
2: I have a rewards credit card, so everything I buy gets me points. If you aren't using a rewards credit card, you're helping to pay for my rewards: the credit card companies generally charge the merchants higher transaction fees for purchases made with rewards cards (otherwise they would lose money on people like me who don't carry a balance). Merchants pass those costs on to customers by raising prices slightly. If you're not using a rewards card, you're paying those higher prices without reaping the benefits. Some merchants charge lower prices for cash, in which case I will usually pay cash because the savings are worth more than the points.
3: Because I pay my balance in full each month, I'm getting an interest-free loan from my bank each month. That money sits in my bank account accruing interest for anywhere from 1 to 30 days (depending on when I make the purchase). With interest rates as low as they currently are, I'm only making a few cents each month this way, but that's still money I wouldn't otherwise have.
How many of these reasons would also apply in Europe? I know that #1 does, but what about #2 and #3? There are plenty of reasons for not using credit cards, which I didn't really get into, but are there reasons that apply in Europe which don't apply in the US?
[+] [-] matwood|14 years ago|reply
[+] [-] ebzlo|14 years ago|reply
[+] [-] nickik|14 years ago|reply
We a better System atm but we should not relatx. They need to start making paying on the internet easier, Credit Cards and Paypal get alot of money by offering shitty servises. The Banks should get into this field and make it easy, safe and free.
[+] [-] anonymous|14 years ago|reply
[+] [-] rmc|14 years ago|reply
[+] [-] vsl2|14 years ago|reply
If credit cards were not already the dominant electronic payment mechanism (i.e. VISA/MC were just starting like Dwolla is), Dwolla could possibly win out because businesses could refuse CC's. Not going to happen now, at least with regards to business-to-consumers. And I don't think most B2B transactions were conducted through CC's anyways.
They seem to be doing okay now, but I don't see any secret sauce that's going to make them anything more than a fringe player in the payments industry.
[+] [-] yalogin|14 years ago|reply
The main advantage with a card is you can pay with it anywhere in the world. That kind of scale takes a lot of time to achieve and that is the reason the whole ecosystem is milking users.
[+] [-] nickik|14 years ago|reply
Im from europe and this is just how it is in my view of the Amerika but I draw my knowlage from movies and stuff so correct me.
[+] [-] Aloisius|14 years ago|reply
I wish someone would make a real alternative credit processing network, but there are so may laws and regulations, I wonder if it is even possible to ever have something like a simple 1% transaction charge.
[+] [-] crikli|14 years ago|reply
Thirty(ish) years later we have an insidious industry that has saturated US culture with the poison of unsecured credit. They set up stands at colleges, snaring college freshmen with offers of free tee-shirts. They sponsor educational curriculums in grade schools advocating the use of credit cards. They even kick money to toy makers to include a little "Visa" or "Mastercard" with their products. They lobby Congress to pass laws making it harder for people who've dug themselves into a hole to include credit card debt in bankruptcy.
Credit is not necessary for modern living, despite the propaganda that permeates every piece of media to which we have access. I know this because 18 years ago I was that ignorant kid that wanted a free teeshirt. Ten years ago I quit using credit as a means of purchase, and six years ago I made my last monthly payment (with the notable exception of student loans, which is a rant for another day).
[+] [-] davej|14 years ago|reply
It's true that some people need to purchase items on credit but the reason that they're so popular now is less to do with having a line of credit and more to do with the legacy of the technology.
[+] [-] tdfx|14 years ago|reply
[+] [-] julian37|14 years ago|reply
http://help.dwolla.com/customer/portal/articles/225303-why-i...
[+] [-] powertower|14 years ago|reply
[+] [-] derwiki|14 years ago|reply
[+] [-] kfcm|14 years ago|reply
[+] [-] kahawe|14 years ago|reply
[+] [-] stereo|14 years ago|reply
[+] [-] pge|14 years ago|reply
[+] [-] dpark|14 years ago|reply
[+] [-] tlrobinson|14 years ago|reply
"The only fee would be if someone paid you. We take a quarter. We really want that quarter. It's all we want!"
He should probably say "25 cents" instead of "a quarter".
[+] [-] jerfelix|14 years ago|reply
That's pretty funny.
[+] [-] ricardobeat|14 years ago|reply
* 1.4 billion credit cards held by U.S. consumers
* Average credit card debt per household with credit card debt: $15,799
* Total U.S. consumer debt: 800 billion (down from ~1 trillion in 2008)
Yeap, look at that debt, credit cards are amazing.
Let me put my f___ the system hat:
1. $2 trillion in transactions per year.
2. Merchants pay between 2-4% in fees for every transaction
Many people seem to forget about the second - "I'm not paying any fees" :/.
That means around $40 billion in fees per year. A few billion short of the national budget for the US Department of Education. I really, really doubt it's costing all this money to send and track (mostly virtual) money around. And we haven't taken into account the late fees (around $20b/year), overcharge fees, annual fees, banking fees and others.
Credit cards are just money harvesting machines.
Why exactly do we need a third-party to handle our payments? Banks own our data and most of the infrastructure. Electronic payments should be part of the basic account package. "Reward" cards are just another marketing gimmick to get you to use more cards.
/hat off
Cutting myself short, I'm extremely excited with what Dwolla/Square and others are doing. It's 2011, I want to make payments with my eyes!
[+] [-] underwater|14 years ago|reply
[+] [-] wmf|14 years ago|reply
[+] [-] mcv|14 years ago|reply
[+] [-] suivix|14 years ago|reply
[+] [-] kahawe|14 years ago|reply
[+] [-] davidcollantes|14 years ago|reply
When I buy electronics with my credit card, I get an extra year of warranty, and buying protection. Dwolla can't beat that.
When I travel, or rent a car, I get insurance coverage with my credit card. Dwolla can't beat that.
When I buy anything with my credit card, and something goes wrong, I lose no money. None at all. Dwolla can't beat that.
Long live, Credit Cards!
[+] [-] rcraft|14 years ago|reply
From this example, clearly some banks are figuring out how to sidestep the credit card companies and provide value. How would this and other similar products like the ING product not be serious threats to Dwolla?
[+] [-] mahyarm|14 years ago|reply
[+] [-] miles_matthias|14 years ago|reply
[+] [-] yason|14 years ago|reply
First, most internet shops can do what the mail order companies have done for decades: they send you the product along with a bill that you can pay with a wire transfer. These days it means you go to you internet banking site and issue the transfer directly from your account to the merchant's account.
Second, a majority of big merchants provide "internet banking payment" where the merchant's site is linked with the top ten major banks' internet services. From the merchant's site you choose your own bank and they will redirect you to the online banking services of that bank, along with the amount they want to charge and some other metadata. Now, your bank will ask you to login to your own internet banking account and use it to authorize a wire transfer for the given amount. After that's done (securely, on the bank's own website), the bank will redirect you back to the merchant's site, again with a token that the merchant's software can use to verify that the transaction went through.
Also debit cards are in high use: they are usually free to obtain as well and it costs a merchant much less to charge a debit card than a credit card. This is sort of related because debit card transactions are practically just wire transfers. Some of them, such as Visa Electron, will actually require an online connection to your bank so that the balance can be checked prior to the wire transfer.
It all comes down to the fact that Finland's banks have been historically well interconnected and they also have a long history of electronic inter-bank transactions. Wire transfers have been a commonly supported and cheap way to transfer money since the 80's: also private individuals can use them to move money to each other free of charge. Further, wire transfers are immediate between accounts in the same bank; between two different banks it takes one night to get them cleared.
[+] [-] EREFUNDO|14 years ago|reply
[+] [-] igrekel|14 years ago|reply
[+] [-] rmc|14 years ago|reply
I don't understand this. Perhaps it's an American thing, but here in EU, I just put my landlord's account numbers into my online banking and I can transfer them money for essentially free. I even set up a standing order so it'll pay the same amount at a fixed day per month. I don't have to worry about paying rent. How does a landlord accept money via their credit card?
[+] [-] bryze|14 years ago|reply
[+] [-] smackfu|14 years ago|reply
[+] [-] kahawe|14 years ago|reply
If it can bring down the credit card transactions costs then great but other than that, I see no reason to move to bitcoins or dwolla because I see not a single benefit for me. Maybe it is great for you USA hackers but here in Europe... shrug.
[+] [-] kin|14 years ago|reply
Usage is effortless.
They make money by charging a percentage on transactions that businesses receive.