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This article was posted a few days ago. I'm a competitor. Having built the same kind of company from the ground up, I have good reason to suspect that most of

This article was posted a few days ago. I'm a competitor. Having built the same kind of company from the ground up, I have good reason to suspect that most of Dwolla's transaction volume does not come from mobile payments, if the $350 million / year number is accurate in the first place. Some revenue comes from Bitcoin transactions, which the article doesn't mention, creating the false impression that Dwolla is already a mobile payments juggernaut. It isn't. Dwolla does not integrate with any point of sale systems to the best of my knowledge, which means that the title of this article is basically fantasy. Dwolla is also breaking California law by operating in a manner that allows California users to use the service without a money transmission license. (Having an investor that processes transactions for banks does not make Dwolla exempt. Anyone who doubts this should read the list of exemptions: http://www.leginfo.ca.gov/cgi-bin/displaycode?section=fin&group=01001-02000&file=1805-1806 http://www.leginfo.ca.gov/cgi-bin/displaycode?section=fin&#3.... If Dwolla were considered a bank it wouldn't need a money transmission license in Iowa, which it has.) I'm not a fan of that law, so as of yesterday I've sued the State of California over it. https://www.facecash.com/legal/brown.html https://www.facecash.com/legal/brown.html

viggity 15y ago
I'm from Des Moines and know a couple of people that work at Dwolla. I haven't heard anything about Dwolla doing a lot (if any) bitcoin transactions. Do you have a source on that? Dwolla has an API so any point of sale system can integrate with it if they so choose, but I believe that most retail locations that accept Dwolla either check the dwolla website, iphone or androids apps for incoming payments.
- thinkcomp 15y ago
  Here are some Bitcoin/Dwolla links: https://en.bitcoin.it/wiki/Dwolla https://en.bitcoin.it/wiki/Dwolla https://en.bitcoin.it/wiki/MtGox#Dwolla https://en.bitcoin.it/wiki/MtGox#Dwolla http://www.siliconprairienews.com/2011/07/as-bitcoin-exchanges-drop-dwolla-milne-says-company-stays-focused http://www.siliconprairienews.com/2011/07/as-bitcoin-exchang... I'm not aware of any POS companies that have actually implemented the Dwolla API, but I could be wrong.
  - eslachance 15y ago
    I don't see any source that would lead me to believe that "Most" of the Dwalla transactions come from BitCoin, anywhere in your 3 links. "A portion of" or "part of" does not mean "most of", any way you look at it. So, do you have any concrete sources?
- waterlesscloud 15y ago
  They're one of the easiest ways to transfer funds into MtGox, the main USD bitcoin trading site. I don't have any idea what percentage of their transactions are bitcoin related, but it's definite that it accounts for at least some of it.
- ebaysucks 15y ago
  Both TradeHill and MtGox stated a couple of months ago that they were the two largest clients of Dwolla. Than Dwolla did chargebacks and SHTF in the Bitcoin world.
JoshTriplett 15y ago
While the article appeared on a San Francisco news site, the company exists in Iowa. Thus, California law matters very little to them.
- thinkcomp 15y ago
  That's just not true. If even one California resident signs up for their service to transmit funds--and I am a California resident who has signed up for their service--California law applies.
  - btilly 15y ago
    I believe that you are wrong. My understanding is that if a California resident signs up for a service with a company in Iowa that has no California presence, that becomes interstate commerce. According to the Constitution and case law dating back to the 1800s (largely established by mail order companies), California does not have the right to regulate interstate commerce. Even when one end of that transaction is in California. That is, in fact, at the heart of the whole sales tax issue with Amazon that has been in the news. By California state law, sales tax is owed, but California can't regulate what Amazon, an out of state company, does. Only Congress has that authority. (It looks like they may do it as well.) I am not a lawyer, and could be wrong. If you want actual legal advice, you need to consult a lawyer. But this is my understanding.
    - thinkcomp 15y ago
      Your understanding is incorrect. California has the constitutional right to regulate commerce within its borders. When a California resident in California signs up for a service, even a service provided by a company in another state, California law applies. In this case particular case, California exceeded its constitutional bounds by passing a law that claims to regulate commerce nationwide. Whether or not you agree with that, the exemption order that my company received proves the interpretation. Either way, Dwolla is not registered as a money transmitter in California, has not applied for a license, is doing business with California residents in the state, and is in violation of the law as a result. New York used to have a physical presence requirement as part of its money transmission statute; those companies without a physical presence in the state were not required to obtain a license. As of September 30, 2011, that changed: all money transmitters with New York customers must obtain licenses, whether or not there is a physical presence. With the advent of the internet, states are realizing that "presence" does not necessarily have to be physical in order to claim tax revenues or license fee revenues.
patio11 15y ago
I follow Bitcoins, in the matter that some people might follow Nascar crashes, and it is not credible to me that Dwolla is primarily getting those volumes on Bitcoin transactions. First, the Bitcoin community is, on the observable evidence, not large enough to support them. Second, my understanding is Dwolla belatedly discovered the value of chargebacks, which bit the Bitcoiners because of all the obvious reasons.
- ashconnor 15y ago
  Last time I checked Dwolla still hadn't solved the ACH chargeback problem.
  - ebaysucks 15y ago
    What patio11 is saying is that Dwolla underestimated the scam potential by accepting payments with are rechargeable and giving non-rechargeable "digital cash" in return. Basics of the scam: Deposit in Dwolla, buy Bitcoins on an exchange, send bitcoins to your own wallet, chargeback Dwolla deposit. A couple of months ago TradeHill, the second largest bitcoin exchange, discovered Dwolla billed them $30K in chargebacks despite their claims of never doing that. It's this Dwolla issue that stopped the influx of new money into Bitcoin and now the price is 90% down. This is a key problem for growing any kind of digital cash like economy: somebody needs to take the risk of turning chargeback-money (USD) into cash-like money (bitcoin), or you need to have a network to somehow take physical cash.
    - itsnotvalid 15y ago
      Or it's not USD that is chargeback, but the nature of digital transaction for the current state. If you go to a store and buy a can of soda with bills and coins, you don't really get a chargeback without handing back the goods. It just illustrate that online transactions should be chargeback-able to protect consumers from fraud. Bitcoin just doesn't cut it.
      - jerfelix 15y ago
dethink 15y ago
Do you have a source for your claim that users are transacting over $500,000 per day on Dwolla for Bitcoins? Dwolla's entire purpose is not to use the traditional POS systems. However, they could certainly create their own inexpensive POS device with no interchange fees or use a cell phone. Glad to see you sue over unjust laws but no need to bash Dwolla. The service is unbeatable compared to any other way to transfer large amounts of money.
- thinkcomp 15y ago
  I edited my post to better reflect what I know for sure.
rokhayakebe 15y ago
Dude, give them some credit for moving $1M per day without even integrating with POS. You CANNOT build a billion dollar company without breaking laws knowingly or unknowingly. EDIT: Please don't take this as an insult, but you seem to have a negative attitude when it comes to competitors. I noticed this a few times. This makes you sound jealous (maybe you aren't, idk) and devalues your comments. EDIT2: And they have done this with $1.3 M in funding, and 12 people. Hats Off. Hats Off.
- damoncali 15y ago
  And they did it in Iowa. Money and developers are not exactly growing on trees around here.
  - littlegiantcap 15y ago
    Hey now don't hate on us Iowa startups.
    - levirosol 15y ago
      yeah, what he / she said! :p
    - damoncali 15y ago
      No hate -I'm in Omaha. And coming from Austin, it is a whole 'nother world trying to find developers who are willing to accept the startup lifestyle. In Austin, they complained about how "easy" it is in the Valley. In Omaha, they complain about how "easy" it is in Austin. Bottom line is you gotta make it work no matter where you are, but I'm pretty impressed with Dwolla's progress given the state of the industry in the Midwest. Not a dig, just an assessment. I got here a year or so ago, and I've been pleasantly surprised at the level of activity in the Midwest, but it's got a long way to go in terms of depth and breadth of skill available to draw upon.
  - kfcm 15y ago
    Actually, I'm not surprised a company like this has started in Des Moines. Contrary to Milne's "location is just an excuse", location is everything for a start up. Des Moines' little secret is that it's a major "back-office" financial-services center--banking, insurance, mortgages, annuities, etc. Wells Fargo, Aviva, Principal Financial and others have either their corporate or divisional HQ's there. There's also a heavy marketing and publishing cluster there (including a couple of sizable companies owned by Hearst--which is also the parent of SFGate). But that's tangential...maybe. Another reason is Des Moines is small and homogenous enough for people in the financial services community to know each other. And to influence/be more easily influenced. These reasons--and others--are why I completely disagree with Milne's statement that "location is just an excuse". It's not. Start ups need the proper environment to take root and grow--infrastructure, people (domain experts and technical), and "political" protection. The fact of the matter is, Dwolla probably would not have survived this long in the Valley, Wall Street, Route 1/128, or Austin. It is a financial-services-oriented start up in a small, but highly concentrated, financial-services town where someone high up on the local totem pole liked what they saw. And sometimes, that's all it takes.
seiji 15y ago
Your lawsuit page raises a few questions: • Are you suing them without a laywer? Everything looks to be directly from you to Somebody Important. • Why are so many people CC'd on your emails?
- thinkcomp 15y ago
  Lawyers are expensive and in my experience do not provide value commensurate with the expense. The underlying issues here are of national interest and involve a complex regulatory regime including the Department of the Treasury, the Federal Reserve, the White House, Congress, and state regulators. There are a lot of people who need to know what's going on.
  - seiji 15y ago
    I sincerely hope you find peace one day.
    - maximusprime 15y ago
      I doubt it. Seems like he likes fighting people.
      - angelbob 15y ago
        Well then, I hope he doesn't find peace but does good and not evil. We need people who like to fight. We just need them fighting the right people. Sounds like he's off to a decent start, if he can continue it.
        maximusprime 15y ago
        I disagree. The world has more than enough people who want to fight and complain. Look at OWS etc.
        angelbob 15y ago
knodi 15y ago
Instead of tell us what they do wrong why don't you tell us what you do right.

viggity 15y ago

I'm from Des Moines and know a couple of people that work at Dwolla. I haven't heard anything about Dwolla doing a lot (if any) bitcoin transactions. Do you have a source on that? Dwolla has an API so any point of sale system can integrate with it if they so choose, but I believe that most retail locations that accept Dwolla either check the dwolla website, iphone or androids apps for incoming payments.

thinkcomp 15y ago
Here are some Bitcoin/Dwolla links: https://en.bitcoin.it/wiki/Dwolla https://en.bitcoin.it/wiki/Dwolla https://en.bitcoin.it/wiki/MtGox#Dwolla https://en.bitcoin.it/wiki/MtGox#Dwolla http://www.siliconprairienews.com/2011/07/as-bitcoin-exchanges-drop-dwolla-milne-says-company-stays-focused http://www.siliconprairienews.com/2011/07/as-bitcoin-exchang... I'm not aware of any POS companies that have actually implemented the Dwolla API, but I could be wrong.
- eslachance 15y ago
  I don't see any source that would lead me to believe that "Most" of the Dwalla transactions come from BitCoin, anywhere in your 3 links. "A portion of" or "part of" does not mean "most of", any way you look at it. So, do you have any concrete sources?
waterlesscloud 15y ago
They're one of the easiest ways to transfer funds into MtGox, the main USD bitcoin trading site. I don't have any idea what percentage of their transactions are bitcoin related, but it's definite that it accounts for at least some of it.
ebaysucks 15y ago
Both TradeHill and MtGox stated a couple of months ago that they were the two largest clients of Dwolla. Than Dwolla did chargebacks and SHTF in the Bitcoin world.

JoshTriplett 15y ago

While the article appeared on a San Francisco news site, the company exists in Iowa. Thus, California law matters very little to them.

thinkcomp 15y ago
That's just not true. If even one California resident signs up for their service to transmit funds--and I am a California resident who has signed up for their service--California law applies.
- btilly 15y ago
  I believe that you are wrong. My understanding is that if a California resident signs up for a service with a company in Iowa that has no California presence, that becomes interstate commerce. According to the Constitution and case law dating back to the 1800s (largely established by mail order companies), California does not have the right to regulate interstate commerce. Even when one end of that transaction is in California. That is, in fact, at the heart of the whole sales tax issue with Amazon that has been in the news. By California state law, sales tax is owed, but California can't regulate what Amazon, an out of state company, does. Only Congress has that authority. (It looks like they may do it as well.) I am not a lawyer, and could be wrong. If you want actual legal advice, you need to consult a lawyer. But this is my understanding.
  - thinkcomp 15y ago
    Your understanding is incorrect. California has the constitutional right to regulate commerce within its borders. When a California resident in California signs up for a service, even a service provided by a company in another state, California law applies. In this case particular case, California exceeded its constitutional bounds by passing a law that claims to regulate commerce nationwide. Whether or not you agree with that, the exemption order that my company received proves the interpretation. Either way, Dwolla is not registered as a money transmitter in California, has not applied for a license, is doing business with California residents in the state, and is in violation of the law as a result. New York used to have a physical presence requirement as part of its money transmission statute; those companies without a physical presence in the state were not required to obtain a license. As of September 30, 2011, that changed: all money transmitters with New York customers must obtain licenses, whether or not there is a physical presence. With the advent of the internet, states are realizing that "presence" does not necessarily have to be physical in order to claim tax revenues or license fee revenues.

patio11 15y ago

I follow Bitcoins, in the matter that some people might follow Nascar crashes, and it is not credible to me that Dwolla is primarily getting those volumes on Bitcoin transactions. First, the Bitcoin community is, on the observable evidence, not large enough to support them. Second, my understanding is Dwolla belatedly discovered the value of chargebacks, which bit the Bitcoiners because of all the obvious reasons.

ashconnor 15y ago
Last time I checked Dwolla still hadn't solved the ACH chargeback problem.
- ebaysucks 15y ago
  What patio11 is saying is that Dwolla underestimated the scam potential by accepting payments with are rechargeable and giving non-rechargeable "digital cash" in return. Basics of the scam: Deposit in Dwolla, buy Bitcoins on an exchange, send bitcoins to your own wallet, chargeback Dwolla deposit. A couple of months ago TradeHill, the second largest bitcoin exchange, discovered Dwolla billed them $30K in chargebacks despite their claims of never doing that. It's this Dwolla issue that stopped the influx of new money into Bitcoin and now the price is 90% down. This is a key problem for growing any kind of digital cash like economy: somebody needs to take the risk of turning chargeback-money (USD) into cash-like money (bitcoin), or you need to have a network to somehow take physical cash.
  - itsnotvalid 15y ago
    Or it's not USD that is chargeback, but the nature of digital transaction for the current state. If you go to a store and buy a can of soda with bills and coins, you don't really get a chargeback without handing back the goods. It just illustrate that online transactions should be chargeback-able to protect consumers from fraud. Bitcoin just doesn't cut it.
    - jerfelix 15y ago

dethink 15y ago

Do you have a source for your claim that users are transacting over $500,000 per day on Dwolla for Bitcoins? Dwolla's entire purpose is not to use the traditional POS systems. However, they could certainly create their own inexpensive POS device with no interchange fees or use a cell phone. Glad to see you sue over unjust laws but no need to bash Dwolla. The service is unbeatable compared to any other way to transfer large amounts of money.

thinkcomp 15y ago
I edited my post to better reflect what I know for sure.

rokhayakebe 15y ago

Dude, give them some credit for moving $1M per day without even integrating with POS. You CANNOT build a billion dollar company without breaking laws knowingly or unknowingly. EDIT: Please don't take this as an insult, but you seem to have a negative attitude when it comes to competitors. I noticed this a few times. This makes you sound jealous (maybe you aren't, idk) and devalues your comments. EDIT2: And they have done this with $1.3 M in funding, and 12 people. Hats Off. Hats Off.

damoncali 15y ago
And they did it in Iowa. Money and developers are not exactly growing on trees around here.
- littlegiantcap 15y ago
  Hey now don't hate on us Iowa startups.
  - levirosol 15y ago
    yeah, what he / she said! :p
  - damoncali 15y ago
    No hate -I'm in Omaha. And coming from Austin, it is a whole 'nother world trying to find developers who are willing to accept the startup lifestyle. In Austin, they complained about how "easy" it is in the Valley. In Omaha, they complain about how "easy" it is in Austin. Bottom line is you gotta make it work no matter where you are, but I'm pretty impressed with Dwolla's progress given the state of the industry in the Midwest. Not a dig, just an assessment. I got here a year or so ago, and I've been pleasantly surprised at the level of activity in the Midwest, but it's got a long way to go in terms of depth and breadth of skill available to draw upon.
- kfcm 15y ago
  Actually, I'm not surprised a company like this has started in Des Moines. Contrary to Milne's "location is just an excuse", location is everything for a start up. Des Moines' little secret is that it's a major "back-office" financial-services center--banking, insurance, mortgages, annuities, etc. Wells Fargo, Aviva, Principal Financial and others have either their corporate or divisional HQ's there. There's also a heavy marketing and publishing cluster there (including a couple of sizable companies owned by Hearst--which is also the parent of SFGate). But that's tangential...maybe. Another reason is Des Moines is small and homogenous enough for people in the financial services community to know each other. And to influence/be more easily influenced. These reasons--and others--are why I completely disagree with Milne's statement that "location is just an excuse". It's not. Start ups need the proper environment to take root and grow--infrastructure, people (domain experts and technical), and "political" protection. The fact of the matter is, Dwolla probably would not have survived this long in the Valley, Wall Street, Route 1/128, or Austin. It is a financial-services-oriented start up in a small, but highly concentrated, financial-services town where someone high up on the local totem pole liked what they saw. And sometimes, that's all it takes.

seiji 15y ago

Your lawsuit page raises a few questions: • Are you suing them without a laywer? Everything looks to be directly from you to Somebody Important. • Why are so many people CC'd on your emails?

thinkcomp 15y ago
Lawyers are expensive and in my experience do not provide value commensurate with the expense. The underlying issues here are of national interest and involve a complex regulatory regime including the Department of the Treasury, the Federal Reserve, the White House, Congress, and state regulators. There are a lot of people who need to know what's going on.
- seiji 15y ago
  I sincerely hope you find peace one day.
  - maximusprime 15y ago
    I doubt it. Seems like he likes fighting people.
    - angelbob 15y ago
      Well then, I hope he doesn't find peace but does good and not evil. We need people who like to fight. We just need them fighting the right people. Sounds like he's off to a decent start, if he can continue it.
      - maximusprime 15y ago
        I disagree. The world has more than enough people who want to fight and complain. Look at OWS etc.
        angelbob 15y ago

knodi 15y ago

Instead of tell us what they do wrong why don't you tell us what you do right.