Dwolla Review: What Is Dwolla & How Does It Work?

Pros

• Offers pay-as-you-go ACH processing
• Many developer tools available
• White-label payments solution available
• Extensive customer support options for paid plans

Cons

• No credit or debit card processing
• Paid plans are very expensive
• Only available in the United States

Dwolla Overview

Dwolla is an ACH payments facilitator headquartered in Des Moines, Iowa. This Dwolla review will cover how Dwolla differs from other services in its market, who it’s for, and what Dwolla will cost you.

Dwolla was founded in 2008 and has changed its business model and product lineup several times over the years. Originally, Dwolla was a P2P bank transfer platform that also catered to businesses. The company has since transformed from a PayPal-like service that both merchants and consumers could use into a platform that will mostly be a good fit for very large businesses that handle a lot of B2B transactions or need some of the company’s specialized services, such as support for mass payouts.

Unlike almost every other merchant services provider we’ve reviewed, Dwolla does not offer credit or debit card processing at all. The company is not a merchant account provider or a payment service provider (PSP), such as Square. In fact, its bank transfer-only business model is designed specifically to avoid the high interchange fees charged by the major credit card associations. Because of this, you won’t find support for things such as credit card terminals or point of sale (POS) systems. Dwolla also lacks support for the kinds of check scanners used to convert a paper check into an echeck payment.

Does Dwolla have a place in your payment processes? Read on.

Are you looking for the best or cheapest way to accept ACH bank transfers? Take a look at our post about ACH payment processing.

Products & Services

What is Dwolla, and how does it work? Dwolla’s concept is surprisingly simple: ACH payments.

Dwolla Payment Processing & Money Transfer

You’re not going to find credit or debit card acceptance, cryptocurrency, PayPal, or any of the other assorted online payment alternatives that have cropped up. Just pure, simple bank transfers. So how does Dwolla handle ACH transfers? You can think of it as something akin to a digital wallet (such as Venmo or CashApp) but scaled for B2B payments rather than P2P transactions.

Here are some of the key features of Dwolla payment processing:

• ACH Payments: A Dwolla account will allow you to send, receive, and facilitate payments. If you’re wondering what “facilitate payments” means, it means you can build a platform that allows users to send funds to one another without requiring you, the merchant, to do anything. (Additional note, you can also charge a facilitator’s fee for the transaction to monetize the platform.) You can also hold balances within Dwolla, like a digital wallet.
• Recurring Payments: If there’s one good reason to take ACH payments, it’s probably to enable recurring payments. As you might expect, Dwolla supports recurring payments.
• On-Demand Payments: These types of payments also work with metered billing, charging a variable amount every month based on usage. This is ideal for utility billing, but it can also be used with any type of usage-based service.
• Bank Account Balance Checks: Unlike PIN debit payments, ACH transactions usually do not have a built-in function to confirm that there are sufficient funds in a customer’s account before attempting a withdrawal. Dwolla includes the ability to check the balance on a customer’s account before debiting funds (with their permission, of course).

Dwolla Platform Tools

If it were just about accepting ACH payments, Dwolla’s niche would be able to be filled by any payment processor that takes them (for example, compare Dwolla vs. Stripe or Dwolla vs. PayPal’s Braintree). Dwolla, however, offers a unique platform based entirely around ACH payments.

Here are some of the features:

• Dwolla User Accounts: An important requirement with Dwolla that you won’t experience with most credit card processors is the need for users to verify their accounts before they can make or receive a payment. Dwolla offers two options to do this: micro-deposits and Dwolla.js. Micro-deposits send two tiny sums (typically less than $0.10 each) to the user’s bank account to verify the account information. Dwolla.js is a client-side JavaScript library used to securely transmit bank account information from your website to Dwolla without any data passing through your server. While Dwolla.js can verify a bank account instantly, micro-deposits require several days to confirm.
• User Account Types: Dwolla separates user accounts into three tiers: Receive-Only, Unverified, and Verified. Receive-only customers are only able to receive payouts and do not require any verification process. They cannot hold balances within a Dwolla wallet. Unverified accounts can both send and receive funds but are limited to sending $5,000 per week. Unverified accounts collect just the customer’s first and last name and their email address and can only transact with verified customers or the master Dwolla account. Verified accounts may be set up for either personal or business use. A verified business account can send and receive funds with a limit of up to $10,000 per transaction, while a verified personal account can send and receive up to $5,000 per transaction. In both cases, the customer can hold a balance within a Dwolla wallet.
• Security Features: As we’ve mentioned above, Dwolla.js is the company’s primary security feature. By keeping sensitive customer bank account information from ever being recorded or stored on your server, this feature drastically reduces the scope of your PCI compliance requirements. Dwolla also uses tokenization to replace actual account numbers with single-use “tokens” that hackers cannot exploit.
• Other Integrations & Add-Ons: Dwolla currently lists a number of third-party integrations that are available to its users. One of the more useful integrations is Plaid, which provides another option for customer bank account verification. Plaid integrates directly with your website and uses tokenization to provide instant account verification. It’s also mobile-friendly. Another integration, Sift, is a fraud-prevention service that uses machine learning and a global data network to detect and proactively prevent fraudulent activity.

Dwolla Pricing

You may be shocked by the enormous chasm between Dwolla’s low and mid-tier plans. We obviously can’t say what a Custom plan costs, but previously, there was a premium plan that cost $10,000/month. Everything but Pay-As-You-Go is aimed at larger businesses. Most small businesses won’t have the ACH volume to justify a $2,000/month plan.

Pay-As-You-Go Plan

• No monthly fee
• 0.5% per transaction (minimum $0.05, maximum $5)
• Limited customer service options (online forum)
• No next- or same-day funding

It’s worth mentioning that 0.5% is less than you’d pay with Stripe or Braintree per ACH transaction, which also have a $5 cap. So for any transaction under $100, Dwolla will be cheaper.

Scale Plan

• $2,000/month
• Fixed transaction fees (undisclosed)
• Full customer support options

Dwolla’s Scale plan also includes the ability to facilitate payments and collect a fee. This fee can be as low as $0.01 per transaction and as high as 50% of the transaction amount. If you set your facilitator’s fee at 50%, no one will ever use your service, and you’ll make no money from it whatsoever. However, a competitively priced fee could help you recoup at least some of that $2,000 per month that you’re paying for your account.

Other features of the Scale plan include being able to hold balances within Dwolla and establish “verified customer” accounts as well as access to next-day (or even same-day) funding. Accelerated funding usually requires an additional monthly fee, so check your price quote carefully before signing up if you need this option.

Custom Plan

• Custom feature development

Suitable only for the largest businesses, Dwolla’s Custom plan includes all the bells and whistles you could ask for and the lowest processing rates. Again, these rates aren’t advertised, as they will vary from one client to the next. However, with the full range of customer support options available, including a developer’s services to put your platform together for you, this option can be a money-saver for larger enterprises that process thousands (or even tens of thousands) of ACH transactions per month.

If you’re considering this plan, we highly encourage you to perform a thorough analysis of the costs and benefits compared to whatever ACH processing service you’re currently using before making a decision. Although Dwolla doesn’t mention it on its website, feedback from users indicates that the company imposes a long-term contract (typically for twelve or 24 months) on Scale and Custom accounts.

Sales & Advertising Transparency

As you would expect from a leading fintech company, Dwolla’s website is polished and professional. The company discloses a lot of information about its products and services, and it provides more detailed pricing information than what you’ll get from a run-of-the-mill merchant services provider. However, since the paid plans both feature customized pricing, you’ll only find processing rate information for the free Pay-As-You-Go plan.

We haven’t found any complaints from merchants who have encountered hidden fees or misleading sales representatives. To the best of our knowledge, the company employs an in-house sales team and doesn’t rely on independent agents.

Contract Length & Early Termination Fee

Dwolla’s Pay-As-You-Go plan doesn’t have a long-term contract, and the Terms of Service provided on the company’s website specifically state that you’re free to close your account at any time. This is a great feature for small business owners, especially if you only process an occasional ACH payment and don’t use your account regularly.

If you sign up for the Scale or Enterprise plans, however, things are different. Like almost every other industry provider, Dwolla doesn’t say a word about long-term contracts on its website. Yet we’ve found plenty of reports from merchants indicating that the company does require a long-term commitment from businesses using these plans. Agreements are typically for an initial term of twelve or 24 months. However, there’s no information available about whether there’s also an automatic renewal clause or for how long the renewal periods will run. Nor have we heard anything regarding an early termination fee (ETF) that you’d have to pay if you closed your account before the end of your contract term.

Customer Service & Technical Support

Customer service options with Dwolla range from barely adequate to top-notch, depending on which pricing plan you sign up for. It’s an open secret in the financial world that bigger clients get better support, while smaller clients have to take what they can get. Dwolla, however, makes it official. If you’re a paying customer on either the Scale or Custom plans, you’ll get some of the best support options we’ve seen anywhere. If, however, you’re just using the Pay-As-You-Go plan and not paying Dwolla a hefty monthly account fee, you’re more or less on your own if you encounter a problem.

• Pay-As-You-Go: You have access to Dwolla’s online forums and can email the company. That’s it.
• Scale & Custom: You’ll also be assigned a dedicated account manager that will be your primary point of contact for any support issues. Many of the better merchant services providers offer this option, and we’ve found that it provides the highest level of personalized support, which includes chat and phone support. Telephone support hours aren’t listed, but you can expect that you’ll have to call during regular business hours if you want to reach someone who can help you with a problem.

Dwolla Reviews, Complaints, & Testimonials

User feedback on Dwolla from across the internet is mixed but generally positive. The company also provides some testimonials and case studies on its website that provide good examples of how users have leveraged the Dwolla platform to their benefit.

Negative Dwolla Reviews & Complaints

Dwolla is not accredited by the BBB but nonetheless has an A+ rating. The company has had four complaints over the past three years, two of which were filed within the last twelve months. This is a notable drop in complaint volume from our previous review update when the company had nine BBB complaints. There are also four reviews posted, all of them awarding either one or two stars (out of five). The majority of these complaints and reviews were filed by customers, rather than merchants, who were asked to use Dwolla and ran into problems.

Issues include:

• Communication Issues: Customers sometimes report difficulty resolving irregularities.
• Security Issues: This is going farther back, but at one point, Dwolla had some security issues that have since been resolved.
• Hard To Understand: Dwolla is an unusual service despite being focused entirely on ACH payments. The website does a mediocre job at clearing up what it is and how it differs from other payment services.

Positive Dwolla Reviews & Testimonials

As is so often the case in the payments processing industry, just about the only positive feedback on Dwolla comes from the company itself. Dwolla’s website includes a Case Studies page that features 28 detailed studies on how actual Dwolla customers used the platform and benefited from it. These studies are very compelling, although, as you would expect, they don’t have anything negative to say about the company.

If you’re considering signing up with Dwolla, we highly recommend that you take a look at these studies, as they’ll give you a better idea of the specific types of businesses that can benefit from the services Dwolla provides.

High points for Dwolla include:

• Standalone ACH Service: ACH services are rarely the star of the show when it comes to payment processing. The Pay-As-You-Go plan makes them easy to utilize.
• Cost-Effective: As long as you’re selecting a plan that’s appropriate to the scale of your activities, Dwolla is pretty cost-effective.
• Unique Service: There are many companies that do some of what Dwolla does, but not that many that are exactly like it.

We haven’t found much other positive feedback on the company elsewhere on the web. If you’re a Dwolla user or have used the company in the past, please feel free to tell us about your experience in the Comments section. Thanks!

Final Verdict

If you’re an eCommerce merchant looking for an ACH payment processing service, Dwolla is certainly an interesting option. With a paid plan, you’ll have access to a lot more bells and whistles than what you’d get with the kind of ACH processing options offered by most traditional merchant service providers. For certain specific types of businesses, Dwolla might just be what you’re looking for.

Unfortunately, the company’s current pricing structure is an “all-or-nothing” proposition. While the free Pay-As-You-Go plan can save you a lot of money, you’ll have to do all the work of integrating Dwolla into your website yourself, and you’ll have minimal options for technical support. At the same time, the company’s paid plans give you access to every feature you could possibly need, including access to a developer to integrate Dwolla’s payment processing system into your website. A plan that bridged the gap between Pay-As-You-Go and Scale would be nice to see.

For now, Dwolla earns an overall score of 4 out of 5 stars. While the company offers a good product, its pricing structure (and the limited options available under its Pay-As-You-Go plan) make it a specialized product that won’t be a good fit for very many businesses.

If Dwolla is too limited (or too pricey) for your business, take a look at either Stripe Payments or PayPal’s Braintree, two other eCommerce-focused payments platforms that offer ACH processing. Finally, our article, The Best Online ACH Payment Providers For eCommerce, has several other great suggestions if you need a more traditional merchant services provider that offers both credit card and ACH processing.

The Merchant Maverick Seal of Approval 🏆

Dwolla	Visit Site

After hours of in-depth research and evaluation, we can confidently recommend this brand to our readers. Get started today and see Dwolla for yourself.

The Merchant Maverick Seal of Approval 🏆

Dwolla	Visit Site

After hours of in-depth research and evaluation, we can confidently recommend this brand to our readers. Get started today and see Dwolla for yourself.

Sources

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