5 ms·

Yup. Further complicating things, ACH isn't truly settled for a 6 months! ACH's can be charged back for 180 days and there is no adjudication process, like with

by pitdesi 15y ago

Yup. Further complicating things, ACH isn't truly settled for a 6 months! ACH's can be charged back for 180 days and there is no adjudication process, like with credit cards. If an ACH gets charged back, you lose the money, that's it. The other major complication with ACH is that most Americans use credit cards for the credit (70% hold a balance). That is something that won't be solved. Others like the benefit of rewards (miles, dollars, whatever). To get payers on board, you need credit, rewards, and exclusivity (i.e. is this the only payment method available at somewhere where I want to shop). The last 2 meaningful companies were paypal and discover card. PayPal had millions of Ebay sellers using PayPal AND they initially paid people to become members. Discover card started the cashback movement and was the only electronic payment option at Sears (largest retailer in the world at the time). More details and discussion in a previous article: http://news.ycombinator.com/item?id=3238880 http://news.ycombinator.com/item?id=3238880 ACH's are essentially free - there are some costs but Dwolla is part-owned by a credit union which probably helps lower the costs. They have major fraud-related costs, but given that fraud under $10 should be very small, their costs aren't much

thinkcomp 15y ago
Dwolla is not part-owned by a credit union. It has an investor that has credit unions as customers. From what I can tell, the company has encouraged this false impression to escape regulatory scrutiny. ACH is also not free.
- torontos 15y ago
  It seems quite clear in multiple locations that Dwolla does in fact have a credit union as an investor, what is your source that it doesn't? http://www.chubbybrain.com/companies/dwolla/investors-funding-history#axzz1fJOFMKdl http://www.chubbybrain.com/companies/dwolla/investors-fundin... https://www.veridiancu.org/ https://www.veridiancu.org/ http://kb.veridiancu.org/veridiancu/consumer/kbdetail.asp?kbid=8830&SearchType=advanced&status=&rfield=&sortmethod=datemodified&usertype=&formaction=search&subcats=True&start=1&match=or&catid=58 http://kb.veridiancu.org/veridiancu/consumer/kbdetail.asp?kb...
  - thinkcomp 15y ago
    http://www.themembersgroup.com/news/dwolla-investment-announcement/ http://www.themembersgroup.com/news/dwolla-investment-announ... "About The Veridian Group The Veridian Group is a wholly-owned subsidiary of Veridian Credit Union, based in Waterloo, Iowa. As a credit union service organization (CUSO), The Veridian Group is committed to providing valuable financial services to credit unions and credit union members." The distinction between a "credit union" and a CUSO matters. If the credit union is extending its charter to cover Dwolla, Inc., then that makes a big difference in terms of regulatory implications. As far as I can tell, The Veridian Group, Inc. (which does not have a charter) has invested in Dwolla, Inc., and Veridian Credit Union (which does have a charter) owns The Veridian Group, Inc.
th 15y ago
> The other major complication with ACH is that most Americans use credit cards for the credit (70% hold a balance). That is something that won't be solved. I doubt Dwolla needs to solve this problem to be profitable. I'm pretty sure there are still a very large number of cash and debit transactions occurring daily. > Others like the benefit of rewards (miles, dollars, whatever). I've seen this argument raised a few times and I still don't understand it. Couldn't merchants (especially online merchants) discount sales that don't use credit cards? The money saved by not offering rewards has to go somewhere.
- mnutt 15y ago
  I believe that the merchant accounts require merchants to charge the same price. It seems like it's mostly a tax on those who pay in cash.
  - dminor 15y ago
    You can give discounts for particular payment methods - the thing you aren't allowed to do is add a surcharge for using credit cards.
    - caw 15y ago
      I hear this, but then see it in places. When I went to get my license plate there was a 3% "convenience fee" to use your debit or credit card. Is it something in the wording?
      - jmikola 15y ago
        I've seen "convenience fees" for credit card usage a few times, specifically when renewing car registration or paying parking tickets online. But there, credit card payment was the only option. As for enforcement for B&M shops, I think it all comes down to wording and appearances. Card companies will accept a gas stations offering a cash discount because that isn't being portrayed as a card tax (negative connotation).

by pitdesi 15y ago

thinkcomp 15y ago

Dwolla is not part-owned by a credit union. It has an investor that has credit unions as customers. From what I can tell, the company has encouraged this false impression to escape regulatory scrutiny. ACH is also not free.

torontos 15y ago
It seems quite clear in multiple locations that Dwolla does in fact have a credit union as an investor, what is your source that it doesn't? http://www.chubbybrain.com/companies/dwolla/investors-funding-history#axzz1fJOFMKdl http://www.chubbybrain.com/companies/dwolla/investors-fundin... https://www.veridiancu.org/ https://www.veridiancu.org/ http://kb.veridiancu.org/veridiancu/consumer/kbdetail.asp?kbid=8830&SearchType=advanced&status=&rfield=&sortmethod=datemodified&usertype=&formaction=search&subcats=True&start=1&match=or&catid=58 http://kb.veridiancu.org/veridiancu/consumer/kbdetail.asp?kb...
- thinkcomp 15y ago
  http://www.themembersgroup.com/news/dwolla-investment-announcement/ http://www.themembersgroup.com/news/dwolla-investment-announ... "About The Veridian Group The Veridian Group is a wholly-owned subsidiary of Veridian Credit Union, based in Waterloo, Iowa. As a credit union service organization (CUSO), The Veridian Group is committed to providing valuable financial services to credit unions and credit union members." The distinction between a "credit union" and a CUSO matters. If the credit union is extending its charter to cover Dwolla, Inc., then that makes a big difference in terms of regulatory implications. As far as I can tell, The Veridian Group, Inc. (which does not have a charter) has invested in Dwolla, Inc., and Veridian Credit Union (which does have a charter) owns The Veridian Group, Inc.

th 15y ago

> The other major complication with ACH is that most Americans use credit cards for the credit (70% hold a balance). That is something that won't be solved. I doubt Dwolla needs to solve this problem to be profitable. I'm pretty sure there are still a very large number of cash and debit transactions occurring daily. > Others like the benefit of rewards (miles, dollars, whatever). I've seen this argument raised a few times and I still don't understand it. Couldn't merchants (especially online merchants) discount sales that don't use credit cards? The money saved by not offering rewards has to go somewhere.

mnutt 15y ago
I believe that the merchant accounts require merchants to charge the same price. It seems like it's mostly a tax on those who pay in cash.
- dminor 15y ago
  You can give discounts for particular payment methods - the thing you aren't allowed to do is add a surcharge for using credit cards.
  - caw 15y ago
    I hear this, but then see it in places. When I went to get my license plate there was a 3% "convenience fee" to use your debit or credit card. Is it something in the wording?
    - jmikola 15y ago
      I've seen "convenience fees" for credit card usage a few times, specifically when renewing car registration or paying parking tickets online. But there, credit card payment was the only option. As for enforcement for B&M shops, I think it all comes down to wording and appearances. Card companies will accept a gas stations offering a cash discount because that isn't being portrayed as a card tax (negative connotation).