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- Date Established
- Des Moines, IA
- Offers pay-as-you-go ACH processing
- Many developer tools available
- White-label payments solution available
- Extensive customer support options for paid plans
- No credit or debit card processing
- Paid plans are very expensive
- Only available in the United States
Dwolla is an ACH payments facilitator headquartered in Des Moines, Iowa. The company was founded in 2008 and has changed its business model and product lineup several times over the years. Originally a P2P bank transfer platform that also catered to businesses, it’s transformed from a PayPal-like service that could be used by both merchants and consumers 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.
Before we delve into all the things that Dwolla can do for your business, we need to discuss what it cannot do. 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 (see our review). 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 that are used to convert a paper check into an echeck payment.
At the moment, Dwolla’s paid pricing plans are mainly geared toward the needs of very large businesses that handle a lot of B2B payments or other multiple transfers. Affordability is also a significant hurdle, as the company’s cheapest paid plan starts at $2,000 per month — far beyond the reach of almost all small business owners. What do you get for that kind of money? Basically, Dwolla’s paid plan gives you access to a feature-packed development platform that allows you to build your own white-label payments platform on your website, complete with individualized customer service options, a vast API library, and access to a developer to help you put everything together.
If you’ve read this far and are thinking that Dwolla is definitely not for you, be aware that the company also has a much more affordable pay-as-you-go pricing plan that’s better suited to the needs of small business owners. There’s no monthly fee, and the cost to process an ACH transaction is a flat 0.5%. The processing charge is also capped at a maximum of $5 per transaction, meaning you’ll save money on large transactions over $1,000. While this plan is much more affordable, be aware that it also comes with some significant limitations. There are numerous restrictions on the size and frequency of transactions, and customer support is limited to an online forum hosted on the company’s website. You won’t even be able to call a live customer service representative.
Dwolla works best for large organizations that need to send and receive a huge number of payments regularly. Utility companies, in particular, will benefit from the company’s platform. You can also use it if you need to pay a large number of employees or contractors, although it’s not designed as a payroll service, and you’ll most likely have to do the accounting work yourself.
For small business owners, Dwolla can work as an ACH-only adjunct to your existing merchant account. Most merchant account providers offer ACH processing services, but they’re almost always offered as an optional feature and typically cost around $30 per month on top of all the other monthly fees you have to pay for your merchant account. If you only take the occasional ACH payment, a free account with Dwolla might be more cost-effective than being saddled with an expensive add-on service that you rarely use.
Dwolla claims to be extremely developer-friendly, and this is mostly true. However, its feature set isn’t quite as extensive as some of its more well-rounded competitors, such as Stripe. You’ll also have to be willing to accept a long-term contract if you sign up for a paid plan. Although the twelve or 24-month terms are shorter than the average merchant account contract, those high monthly fees will translate into a significant financial commitment over the life of your contract.
While Dwolla won’t be a good fit for a traditional small business, its platform offers some serious capabilities to businesses that can capitalize on the features it provides. The company earns a score of 4 out of 5 stars, although we’d caution you that it’s not for everyone, and you’ll need to have a long discussion with Dwolla’s sales team before you commit to signing up.
Are you looking for the best or cheapest way to accept ACH bank transfers? Take a look at our post about ACH payment processing.
Table of Contents
Products & Services
Dwolla’s concept is simple: ACH payments. 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.
Here’s an overview of the company’s primary features:
- 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.
- 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 kind of 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 an 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.
- Recurring Payments: Subscription-based payments are becoming increasingly common for many types of services these days, and Dwolla offers full support for this payment method. Recurring payments can be a fixed amount each month, or you can set up metered billing, where the amount varies by usage. This method is particularly useful for utilities.
- 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 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).
- 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 cannot be exploited by hackers.
- 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.
Fees & Rates
$10,000 per month. That’s the first number that’s going to get your attention when you look at Dwolla’s Pricing page. With many merchant service providers today offering full-service merchant accounts for as little as $10 per month, you might wonder why anyone would pay that much money for a service that doesn’t even allow you to accept credit cards. The answer is that Dwolla’s Enterprise Plan is designed to meet a specific need among very large business entities that don’t even remotely resemble the typical use case of the average small business owner. If you’re running the local water department for a medium-sized city, for example, this plan might actually be very affordable for you. In fact, it might save you a lot of money over whatever you’re currently using, thanks to absolutely rock-bottom per-transaction rates.
At the other end of the spectrum, Dwolla’s Pay-As-You-Go Plan doesn’t charge a monthly fee at all. That makes it a much more attractive option for small businesses. However, you’ll want to consider its limited feature set before signing up.
Dwolla also offers a Scale Plan that represents the middle tier of both costs and features. Unfortunately, at $2,000 per month, it’s pretty much out of reach for most small businesses. Below, we’ll go into detail about the features available under each plan. You should also remember that, regardless of which plan you choose, transfers between Dwolla accounts are always free.
With no monthly fee and all ACH transactions costing a flat 0.5% to process, this is Dwolla’s most affordable plan for small business owners who just need to process the occasional ACH transaction. Processing charges are a minimum of $0.05 per transaction and are capped at a maximum of $5 per transaction. Be aware that the break-even points for these caps are $10 and $1,000, respectively. While you’ll lose money if you process a lot of smaller transactions below $10, you’ll save a significant amount of money on transactions over $1,000.
This plan does, however, come with some serious limitations. You won’t have access to certain desirable features, including next-day and same-day funding, facilitating payments, on-demand payments, and balance holds. You’ll also have to contend with some severe limitations on your customer service options. Merchants on this plan have access to Dwolla’s online forum — and that’s it. You won’t have access to the company’s Slack channel or a dedicated account representative. In fact, you won’t have access to customer service by telephone, either. Unless you’re very tech-savvy and feel comfortable that you can troubleshoot problems on your own, this could be a distressing limitation.
If Dwolla’s Pay-As-You-Go Plan is too limited for your needs, your next step up is the Scale Plan. Unfortunately, this plan comes with a standard $2,000 per month account fee, which puts it way out of reach for most small business owners. ACH processing rates are not disclosed, as they’re customized for your business. For the price you’ll be paying for your account, you can rest assured that those rates will be significantly lower than the 0.5% advertised for the free plan.
Dwolla’s Scale Plan does, however, include access to most — but not all — of the features that Dwolla has to offer. This includes access to the full range of customer support options, including the services of a developer to integrate the Dwolla payments platform into your website. This feature alone is well worth the price — if you can afford it. You might still have to pay extra for some of the optional third-party integrations, so make sure that your pricing quote includes information about these features.
Dwolla’s Scale Plan also includes the ability to facilitate payments and collect a fee for it. This fee can be as low as $0.01 per transaction and as high as 50% of the transaction amount. We shouldn’t even have to tell you that 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 the ability 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.
Suitable only for the largest businesses, Dwolla’s Enterprise Plan includes all the bells and whistles you could ask for and also 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 the services of a developer 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 as 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 Enterprise account holders.
Like almost everything else in the processing industry, there are limitations on the size of transactions that Dwolla can handle. While the company doesn’t offer a prominent disclosure on its website, it does publish a Terms of Service agreement that includes the following useful information:
4. Transaction limits.
4.1 Account limits. You are limited on the amount of money that can be sent from your Account per transaction. The per transaction limit varies based on your Account type. Personal Accounts are limited to sending $5,000.00 per transaction. Business, Non-profit, and Government Accounts are limited to sending $10,000.00 per transaction. We reserve the right to decrease your sending limit at any time, for any reason.
4.2 Increased limits. You may apply for an increased sending limit here. Approval is solely in Dwolla’s discretion and may be reassessed and/or revoked at any time.
A maximum $10,000 transaction size should be good for most businesses, but you can increase the limit if you typically deal with much larger numbers. That’s something you’ll want to talk to Dwolla about from the get-go.
For context, Square (see our review) claims that the maximum transaction size it supports is $50,000. The reality is transactions much smaller than that get flagged as suspicious and can lead to an account hold or termination. There’s no data on how well Dwolla handles this, but with the Scale and Enterprise plans, you can require users to go through additional steps to verify your customers’ identities, which should reduce some of the trouble.
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 provider in the industry, 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.
From a business perspective, this requirement makes sense — even if we don’t like long-term contracts any more than most merchants do. The Scale and Enterprise Plans involve a serious commitment from both parties, and the company would naturally want some kind of guarantee that you aren’t going to leave with little or no notice. Business owners considering either of these plans should do a careful analysis of the costs and benefits of signing up before making this kind of commitment. For example, signing up for the Enterprise Plan with a 24-month contract is a commitment to spend at least $240,000 over two years just to maintain your account. Will the savings in processing costs and access to all of Dwolla’s exclusive features be worth it? You’ll want to be very confident that the benefits outweigh the costs before signing up.
As with any merchant services provider, we strongly recommend that you read your entire contract before signing up. The Terms of Service provided on Dwolla’s website constitute only a small portion of your overall agreement, and you’ll want to be very familiar with the additional requirements outlined in your other contract documents as well.
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.
However, the company has previously gotten in some trouble with the Consumer Financial Protection Bureau for misrepresenting its data security practices. In early March 2016, Dwolla was fined $100,000 by the CFPB, in addition to being called out for its misconduct. While this was a costly and embarrassing incident for the company, we’re unaware of Dwolla having suffered an actual data breach as a result of its lax security measures. Today, Dwolla appears to have instituted every industry-standard security measure available, so you shouldn’t have any worries about your account being compromised. Unfortunately, the standard of what constitutes adequate data security is a continuously moving target, as hackers are always coming up with new ways to get around commonly used security safeguards.
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 Enterprise 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.
Customers on the Pay-As-You-Go Plan have access to Dwolla’s Developer Forum on the company’s website, but that’s just about it. You can also contact the company via email and hope for a response, but you won’t have access to telephone support at all. While this may seem pretty draconian (and it is), remember that until very recently, Square didn’t offer telephone support to its merchants, either. It eventually gave in to the demands of its merchants and added this option, and we’re hopeful that Dwolla will do likewise in the future. There’s nothing inherently wrong with the Developer Forum itself, as it seems to be a valuable source of information. However, unless you have coding skills or access to a developer, it won’t be beneficial to you.
Merchants on the Scale and Enterprise Plans have access to a much more robust set of customer service options. Considering how much they’re paying every month in account fees, we would expect nothing less. In addition to the Developer Forum, you’ll also have access to telephone and email support as well as a dedicated Slack channel that can yield results in a very short time. 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.
Most importantly, Scale and Enterprise Plan users also have access to a developer (officially called an integration engineer), who will provide any assistance necessary to integrate the Dwolla payments platform into your existing website and keep it running smoothly for as long as you maintain your account. It’s a great feature and well worth the expense, as you would otherwise have to hire your own developer, and they probably wouldn’t be as familiar with the Dwolla platform as an in-house employee. Dwolla’s website also includes links to an extensive library of documentation and user guides that are geared toward tech-savvy folks who want to do the integration work themselves.
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.
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 Reviews & Complaints
Dwolla is not accredited by the BBB but nonetheless has an A+ rating. The company has four complaints from 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.
Among the complaints filed by merchants, there don’t appear to be any identifiable patterns that would suggest a systemic problem with the company. We’d also note that Dwolla is a small company with a very specific business use case, so it’s not surprising that it would have a low complaint volume.
Positive 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.
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!
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 exactly 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. However, the cost of these plans is way beyond the reach of the average small business owner. Dwolla’s Scale and Enterprise Plans are niche products that will only make sense for a very small number of business types.
Ultimately, we’d love it if the company would offer a middle-of-the-road option that would be a better fit for most small businesses. Merchant services providers typically charge an additional $30 per month for ACH processing, and a plan at this price point would be a great way for Dwolla to expand its customer base and allow for more businesses to take advantage of its unique services.
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 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.
We've done in-depth research on each and confidently recommend them.
We've done in-depth research on each and confidently recommend them.