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Dwolla Review – A Fee Free Credit Card Payment Mechanism

Dwolla Review – A Fee Free Credit Card Payment Mechanism

Dwolla was created to try to change the electronic payments industry. In 2008, the company was established with the aim of avoiding credit card interchange fees. You sometimes have to pay interchange fees when you buy things on the Internet, or when you swipe your credit card.

Dwolla set out to provide a low cost payment service that businesses may use so that they need not charge an interchange fee. Businesses may also set up their payment system so that private customers can use their credit cards without having to pay interchange fees.

Similar To PayPal And Yet Slightly Different

If you are a private citizen and you wish to pay for something, then you may link your credit card with PayPal and pay for a service without being charged an interchange fee. In this sense, PayPal is very similar to Dwolla.

The way they differ is how they approach the problem of avoiding interchange fees. Dwolla set up their own proprietary payment network that is very similar to the one that MasterCard and VISA has. Since Dwolla controls the network, they have decided not to charge interchange fees. They are more interested in getting you to link your checking account to your account than getting you to link your credit card. Linking your checking account means there is no need to worry about interchange fees.

Let’s Get Down To Basics

Dwolla has built their own proprietary network so that they may remove the most common fees that merchants have to pay when they take card payments. Dwolla’s biggest selling point for merchants is that merchants need not pay fees. Dwolla’s biggest selling point for private citizens is that they may avoid paying card interchange fees (just like how they may avoid them by using PayPal).

Thanks to the way that Dwolla works, they have been able to eliminate quite a bit of transfer fraud and transfer delays. Fraud and delays are a big problem on current network such as the ACH network, and that is the network that many banks use. The way that Dwolla works, they are enabling the free and instant cash transfers and the free use of credit cards and debit cards.

A large explanation on how Dwolla Works

How Much Are Dwolla Charging For Their Service?

The short answer is that they are charging nothing for electronic payments. You are allowed to send and receive money for free with a Dwolla account, which is only partially true for PayPal holders. For example, if you send money to a friend via PayPal, then it is free, but if you pay somebody for something, then there is a fee with PayPal. With Dwolla, there are no fees for individual friend-to-friend transfers and no fee for payments to friends and merchants.

There are no additional fees, no cancellation fees, no service agreements, and no PCI Compliance fees. If you are a business, you may pay a flat monthly fee to use the payment network, and there are no transaction fees, which suits businesses that make frequent transactions for smaller amounts of money. The rates for merchants are very competitive to the point of being the best in the industry.

A dwolla instant infographicMaking Waves In The Industry

Dwolla has made quite a few waves in the credit card industry. People in the credit card processing industry and have been standing up and paying attention. Dwolla is offering low-risk payment alternatives to merchants, and they are offering it for free. The only drawback is that the merchant and the customer need to have a Dwolla account.

If Dwolla were more popular, it could force changes in the entire payment processing industry. If they were more popular and pulling food out of the mouths of the bigger companies, then bigger companies and networks would probably create fee-free networks too and the whole notion of a card charge (a fee for using a card) would disappear overnight. Yet, alas, Dwolla is largely an unknown company.

It Is Impossible That One Day Everybody Will Have A Dwolla Account?

No, it is not. Over 192 million people have a PayPal account according to Statista. If PayPal were offering a similar deal, then a massive amount of people could use it. To give you an idea of how many 192 million is, there are only six countries that have more than 192 million people in them. If so many people are willing to sign up to such a similar payment tool, then it is possible that they may sign up to Dwolla if they had enough incentive.

Dwolla Is Free, Instant And Easy-To-Use

PayPal is only free if you send money between friends, but Dwolla is free no matter who you send the money to. You can send money to people you are paying and to businesses and they do not have to pay a fee, and nor do you.

The Dwolla is easy to use, but trying to convince people of that is tough. This company allows you to send payment instantly, but so will PayPal these days.

You do not have to pay fees with Dwolla, whereas professional workers that use PayPal and Skrill have to pay fees. Dwolla should be riding high and dominating right now, so why isn’t it?

Dwolla Has A Serious Image Problem

What the company needs is a series of PR manager to work for them on commission (or free). These PR managers need to make some serious changes to way Dwolla is perceived by the general public.

So few people have heard of the company that they are instantly suspicious of it. People also cannot see the benefits of using Dwolla over PayPal.

What is the point in investing time in Dwolla if other people are not using it? For example, what is the point of signing up as a freelancer if you never have any clients pay you by it? What is the point in adding this payment system as an option to your eCommerce website shopping cart if nobody ever uses it? What is the point in signing up and going through the authorization procedure if there are very few online stores or offline stores where you may use it?

Sign Up For Dwolla If You Are Tired Of PayPal Fees

Some people are going to say, “PayPal fees? What PayPal fees?” These are people that have never taken a PayPal payment through selling an item or a service.

If you have sold a service or product and you have taken payment via PayPal, then you will know (only too well) how much PayPal charges for fees. Frankly…it is not that much, but Dwolla are saying we shouldn’t be paying anything at all.

If you are truly tired of PayPal fees and you think you can convince your clients or customers to pay you via Dwolla, then by all means you should do it and save yourself a few dollars.

An example screen print of how the Dwolla app works

Why Can’t Dwolla Team Up With A SmartCard?

It is a shame that this company cannot team up with a SmartCard company such as Plastc. They could help to make each other popular. People could carry their SmartCard around with them with their Dwolla account already installed. Whenever the cardholder comes across a merchant that charges an interchange fee (credit card fee), then this payment system could be used instead. Sadly, this is just a pipe dream at the moment.

Conclusion – Don’t Be A Trail Blazer

I have read in a variety of places that the developers of Dwolla (the app, service and software) have been known to contact some of their users to ask users why they do not use their service anymore. Whenever I read this, I really feel sorry for the developers because I wouldn’t be able to understand it either if I had created such a great payment system.

Dwolla has created a system that is cheaper than PayPal, that saves merchants massive amounts of money in fees, and a system that can eliminate fees for all private users/buyers with a Dwolla account. The development team have created something truly amazing and something that people really need…and yet they still have to sell the idea.

Ugly Man With Beautiful WomanThe developers must be sat in their office wondering why people are not kicking down their door to get at their Dwolla project. They must feel like a beautiful woman in a night club that keeps getting turned down by ugly men.

The fact is that if Dwolla was covered in pollen, it would be the bee’s knees. But, it has an image problem, especially when you consider the fact that you can mention the company to 50 of your friends, and only one will know what the company is.

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It is a great company, service, and product, but don’t be a trail blazer. Don’t start using it until you start hearing your friends and co-workers talking about it. This is all because the way Dwolla is going, it will probably be sold off and dismantled in a few years. Until you start hearing people talk about it, you should probably hold off on getting an account.

About The Author

Ash The Great

After a varied career in different industries from the hospitality industry to the financial consultancy industry, Ash now spends his days working as a professional writer.

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