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Introducing Dwolla

Dwolla Accepted Here There's a new player in the payment processing world and, if you're a small business owner, you need to know about this one.

The player is Dwolla, a Des Moines, IA startup company looking to alter how we exchange money in business and between friends and family. Dwolla was created by a small business owner, Ben Milne, to address a major pain point in his business.

As the owner of a custom speaker company, Elemental Designs, Milne was tired of paying upwards of $50,000 per year in credit card interchange fees. After finding no viable way to reduce these fees, he decided to create one himself with the help of business partner and software developer, Shane Neuerburg.

The origin of the company's name, a combination of "web" and "dollar," describes the service well. It's a way of transferring dollars electronically, via the web. The main differentiator for Dwolla, as compared to other payment platforms, is its flat fee of $.25 per transaction. That's it. 25 cents. No matter what amount of money is transferred. When you consider credit card and PayPal fees can be 2-5% of the transaction, plus a $.30 transaction fee, the potential savings using Dwolla are apparent. This blog post demonstrates this very effectively. Why would you, as a business owner, want to use Dwolla? The two biggest reasons are money and convenience. Let's break it down....

Money – the almighty Dwolla

  • As mentioned above, typical credit card fees include a 2-5% Interchange fee, plus a $.30 transaction fee. Compare that to Dwolla's flat $.25 cent fee per transaction and the difference is clear.
  • It's free to create an account for both consumers and businesses.
  • Merchant applications for use in your store are free (currently available for the iPhone, iPad, and iPod Touch, with a web version coming soon).
  • Sending money costs you nothing (except the amount you're sending, of course) unless you elect to absorb the $.25 transaction fee for the receiver.

Convenience for the business owner

  • You don't need a merchant account. Tie Dwolla to your existing bank account.
  • Electronic transmission between Dwolla accounts means faster, easier deposits (money sent from one Dwolla account to another happens virtually instantaneously).
  • It's cheaper and faster than mailing a check.
  • You get instant notifications of transfers in and out of your account.
  • It's better for the environment. Just think of all the trees you'll save!
  • Dwolla can be used in your store and online.
  • You don't have to have a website. You can set up a HUB page to accept payments online or users can send you money directly from their Dwolla account once or on a recurring basis.
  • If you have an e-commerce website and want to accept Dwolla, the following content management systems (CMS) have Dwolla plugins:
    • Magento
    • OSCommerce
    • creloaded
  • Far Reach's Website Management System, SiteLight, already offers Dwolla as a payment option.
  • If none of the above CMS solutions fit your needs, you can integrate Dwolla directly into your website using their robust APIs.

Convenience for your customers

  • All they need is their smartphone (Dwolla has apps for iPhone, Android, and Windows Phone 7) or an Internet connection to pay you or anyone else with a Dwolla account.
  • They can send single or recurring payments via your HUB page.
  • Payments sent to you via your Hub page can be funded by the user's Dwolla account or their bank account.
  • They can use Dwolla Spots to find merchants who accept Dwolla and pay for goods and services in seconds.
  • It's simple for them to send money to their Facebook and Twitter friends or anyone with an email address.
Ok, you might be saying, that's all well and good, but I still have some reservations. I mean, how safe is my money? Pretty darn safe, as it turns out. Funds up to $250,000 held in Dwolla accounts are FDIC and NCUA insured.

Dwolla has only been a player on the national stage for a few months, but it is experiencing tremendous growth, meaning more and more people are choosing this as a viable way to exchange money. Combine that with the potential cost savings you could realize and the fact that the cost to accept Dwolla in your business is zero and it seems like the logical thing to do, doesn't it? So, what are you waiting for?