Eliminate Interchange Fees With Dwolla; The Merchant Account Alternative

How good would it feel to not have to pay any interchange fees? You know, that 2-7% that you pay your credit card processor every time you run a transaction. Well, Iowa based Dwolla can help with that.

Founded in 2009 by Ben Milne and growing at an enormous rate, Dwolla is looking to become THE alternative to a traditional merchant account.

I stumbled upon Dwolla last year, but wrote them off as another payments start-up which would eventually fizzle out. It appears that I was wrong, which is good news for all of us.

What is Dwolla and How Does it Work?

Dwolla is a cash-based payment network that works directly with your financial institution. It allows everyday people and/or business owners to transfer money into and out of each other’s bank accounts either online or through a mobile device. No credit or debit card required. Instead of VISA or Mastercard, think Dwolla.

There’s a ton of other helpful info in their Support Center and on their Youtube channel, so get acquainted. These guys are gonna be around for a while.

How Much Does Dwolla Cost?

$0 for any transaction under $10, and $0.25 for any transaction over $10. That’s it.

Example:
For a $9 transaction the Dwolla cost is $0.
For a $100 transaction the Dwolla cost is $0.25.
For a $1000 transaction the Dwolla cost is $0.25.

Got it?

Who’s Using Dwolla?

This is the million dollar question. Why? Because both parties (customer and merchant) have to be registered with Dwolla in order for them to exchange money. Similar to Paypal, the process doesn’t work if one of you isn’t part of the Dwolla network.

As of February, 14th 2012, Dwolla had 80,000 users. They still have a long way to go before they become the go-to payment network, but they’re growing at a rate that makes them a viable option for your business.

Btw, here’s a list of all the businesses that currently accept Dwolla as a payment option. When will you be on that list? 🙂

Is Dwolla Safe?

Since there’s no physical card involved with a Dwolla transaction, there isn’t any card info to be stolen. That solves one part of the safety issue. Secondly, Dwolla never transfers, releases, captures or transcribes your financial information during a transaction. Visit their Security & Privacy page to learn more.

Note: There’s always some security risk when you’re dealing with payments. Money is an easy target. But the simple fact that a Dwolla transaction does not involve a credit/debit card at all, reduces that risk tremendously.

Conclusion

I’m always on the lookout for alternative payment methods that can either save you money or help you process more efficiently. At the very least, you should add Dwolla as an additional payment option…similar to PayPal. There might not be that many people using Dwolla now, but the user base is growing daily, and the savings you can see from even a few transactions will be well worth it. Especially if you sell big ticket items.

Let me know if you’d like me to put you in touch with someone at Dwolla.