Dwolla Explained

Dwolla, Inc
Location:Des Moines, Iowa, United States
Registration:Required (can be done through API)[1]
Company Type:Private
Num Employees:75 (2015)[2]
Website Type:Online payment system
Num Users:500,000 (Fall 2013)
Launch Date:December 1, 2010[3]
Current Status:Active

Dwolla is a United States-only[4] fintech company that provides businesses with a connection to the ACH Network or RTP Network (Clearing House’s privately-owned real-time payments network).

History

The company was founded in 2008 in Iowa by Ben Milne and Shane Neuerburg.[5] After raising $1.31 million in funding,[6] Dwolla launched in the United States in December 2010 to a few small banks and retailers.[7]

By June 2011, Dwolla had grown to 15 employees, 20,000 users, and $1 million in weekly processing volume.[8]

Dwolla has about 650 clients and about 30 million users. It processed about $45 billion in payments in 2022, up from $30 billion in 2021 and $20 billion in 2019. About 80% of its clients are small businesses.

Dwolla provides a white label service consisting of APIs to use the ACH system[9] and white label services expanded from payouts to include instant bank authorization for debiting bank accounts[10]

FiSync

On May 25, 2011, Dwolla released its FiSync integration, which aims to allow instantaneous transactions instead of the typical 2–3 day of the ACH Network transactions.[6], Dwolla had 11 financial institutions signed on, providing access to 600,000 potential customers.[11] Dwolla quietly discontinued FiSync on January 31, 2017.[12]

Government payments

As of April 2013, the Iowa Department of Revenue allows businesses that pay cigarette stamp taxes to use Dwolla as a method of payment.[13] Iowa Governor Terry Branstad announced on January 6, 2014 that the state will expand the partnership to allow customers of Iowa Department of Transportation to pay fuel tax and vehicle registration costs online using the service.[14]

In February 2015, the US Treasury Department's Bureau of Fiscal Service added Dwolla to the system which allows US Federal agencies to issue and receive electronic payments.[15]

Inadequate security practices

On February 27, 2016, the Consumer Financial Protection Bureau (CFPB) released its first data security-related enforcement action[16] against Dwolla, Inc. Relying on its UDAAP-related authority, the CFPB alleged that Dwolla failed to maintain adequate data security practices despite representations made on the company website and in communications with consumers that the company has implemented practices that exceed industry standards. Among other requirements, Dwolla has agreed to settle and must cease making any misrepresentations about its data security practices.

The Dwolla Platform

In 2016, Dwolla became a B2B SaaS company, selling its payment software directly to businesses so they can offer their customers bank transfers as a payment option in addition to credit cards. Since 2016, the Dwolla Platform has added new features along with real-time payments, push-to-debit payments and Same Day ACH credits or debits.

See also

Further reading

Notes and References

  1. Web site: API - Create a Customer.
  2. Web site: Roberts . Daniel . Dwolla, a payments startup, scores its first big-bank partner . Fortune . April 8, 2015 . December 3, 2016.
  3. Web site: Dwolla blog - Cat is out of the bag. We are now national..
  4. Web site: Businesses. Dwolla (company site). 31 October 2015. Today, Dwolla is only available in the U.S., but we’re always exploring ways we can expand to help every small business move money quickly and safely.. https://web.archive.org/web/20150907041357/https://www.dwolla.com/businesses. 7 September 2015. dead.
  5. Web site: We've officially passed $1M a week in transactions . Dwolla blog . Milne, Ben . June 17, 2011 . January 22, 2012.
  6. Web site: Alexia. Tsotsis. Dwolla's FiSync Lets You Instantly Access Cash, Eliminates ACH Wait Times For Banks. March 25, 2011. TechCrunch. January 22, 2012.
  7. Web site: Dwolla Meetup packs a full house at Mars Cafe . Silicon Prairie News . December 2, 2010 . November 13, 2015.
  8. Web site: Tsotsis. Alexia. Payments Service Dwolla Hits $1M A Week In Transactions. June 16, 2011. TechCrunch. January 22, 2012.
  9. Web site: Dwolla Unveils White Label Offering - Bank Innovation. 2 September 2015 . 28 October 2016.
  10. Web site: Bank account verification and transfers in just a few lines of code. dead. https://web.archive.org/web/20160503144901/http://blog.dwolla.com/bank-account-verification-and-transfers-in-just-a-few-lines-of-code/. 3 May 2016. 3 December 2016.
  11. News: Dwolla launches in Iowa . Silicon Prairie News . December 1, 2009 . January 22, 2012 . Wood, Geoff.
  12. Web site: Milne. Ben. 2017-02-05. Saying Goodbye To Old Products. 2020-12-21. Ben Milne. en-US.
  13. Web site: Iowa Government: Dwolla and Electronic Payments In, Paper Checks Out. www.creditcardprocessingspace.com. 5 April 2013 . April 17, 2013.
  14. Web site: Des Moines Register. . 28 October 2016.
  15. News: Boyd. Aaron. Pay.gov adds 'digital wallet' payment choice. 27 October 2015. Federal Times. TEGNA. 24 February 2015.
  16. http://files.consumerfinance.gov/f/201603_cfpb_consent-order-dwolla-inc.pdf "Administrative Proceeding"

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