10 ms·

It’s Instant

151 points by sant0sk1 15y ago

singingwolfboy 15y ago
So what? Why would I use Dwolla instead of a credit card?
- jessegavin 15y ago
  I can't think of any reason a consumer would benefit from this over a credit or debit card. Except maybe if they regularly overdraft and prefer a $5 fee to whatever their bank charges.
  - dlsspy 15y ago
    What about the ones they list? Merchants having to pay a lot to process your money makes things more expensive. That affects you.
    - andrenotgiant 15y ago
      But for it to turn into a direct benefit for you, merchants would have to give you a discount for using Dwolla. Does that/can that happen?
      - jerguismi 15y ago
        That can't happen, since credit card companies won't allow this. However, some merchants could accept _only_ dwolla, which could change the game.
        stickfigure 15y ago
        Don't discount the possibility that this might be fixed with legislation.
        frankydp 15y ago
        CC would be against this but isn't the target merchant the one that does not already take CCs? Street merchant, plumber, kid that shovels my driveway, or wheeled merchant.
      - jessegavin 15y ago
        That's exactly my point. In order for me to want to use Dwolla (and pay the $3 set up) I would have to believe that enough merchants out there will let me pay with Dwolla that I would get some unique benefit for using it. Dwolla is awesome for merchants and neutral for consumers.
      - praxeologist 15y ago
        I give my customers rewards points for using Dwolla which they don't get when paying with other methods. I'm more of a small business and have to micromanage this all though. (I didn't know this is supposedly against CC terms too haha) I don't see why my average (online) customer is going to pay $3/mo for this, but then I am probably the only place they are using Dwolla. Also, I am very hands on with them and just take "their word" or fill an order when I get the notice that the 2-3 day travel of funds from their bank to Dwolla is good. Again, I think this Instant thing all ties back to the CU Exchange feature I discussed before. Dwolla tries to forge a sort of deal where this bank's customers get Instant without the $3/mo fee and Dwolla + the bank chop the other half of money made in "transit time interest". Long term, I see the success of Instant tied to this, banks being able to offer free Instant as a perk with an account with them, versus Instant used as a cheaper overdraft or standalone feature.
      - angryasian 15y ago
        this is exactly the point, unless merchants actually display the discount you receive vs using a credit card then it doesn't matter. More than likely merchants will swallow the profits, and consumers won't see the benefit. I earn quite a bit from rewards points as well, the difference in monetary savings vs credit cards would have to be proportional.
    - deleted 15y ago
      [deleted]
  - pbreit 15y ago
    It's targeted more for situations where credit/debit cards are not currently accepted. For example, large transactions for professional services. Think of it more as replacing checks, not cards.
    - miles_matthias 15y ago
      That is one of the goals but the other goal is reducing the cost for the merchant. Merchants will prefer you to pay with Dwolla as opposed to a credit card because they don't give up as big of a fee on each transaction, this earning them more revenue.
      - pbreit 15y ago
        Maybe. But 2-3% is about the right price for a financial txn between strangers, especially when not face-to-face.
        eridius 15y ago
        Why? Why should there be a percentage-based fee at all for financial transactions? This is an idea that credit card companies have pushed onto the world, but there's no reason it needs to be accepted as fact.
        pbreit 15y ago
        I didn't really mean all. I did say between strangers and especially when the two are not face-to-face. Two other qualifiers: 1) when "good funds" need to be transferred immediately and 2) for dollar ranges from around $10 to $1,000. This makes up the vast majority of retail commerce for which credit cards are so well suited and widely used. Best approach is to look for areas where credit cards are not widely used instead of trying to displace them in areas where they work really (really, really) well.
    - tryitnow 15y ago
      I've been wondering why I would use this and I think this comment hits the nail on the head. But why would want to pay $3? Big payments are usually pretty well-timed and don't need to be "instant." Hmmm, not sure where Dwolla is going with this, it seems to make more sense to laser focus on those who would find the most use for their product (big ticket buyers and sellers, not people buying a t-shirt on a whim).
- oneplusone 15y ago
  Because the merchant in question may not accept credit cards. For example, if I do contract work and invoice you for $8,000 I except the full amount. So if you were to pay with credit card it would cost you an extra 2.9%/$232 to pay me.
- patio11 15y ago
  The sweet spot is probably rent payments and the answer is "Because your landlord won't take a rent payment on a CC most of the time because their profit margins are only a little more than the CC fee."
  - alsocasey 15y ago
    I can't imagine my landlord doesn't make more than 3% on my apartment every month...
    - eli 15y ago
      Well, we can speculate on the reasons, but I've rented maybe a dozen apartments, some from individuals and some from management companies, and none of them has ever offered to take credit cards.
    - betterth 15y ago
      I would certainly hope so! But why should your landlord shave off 3% of his ENTIRE revenue stream? I mean, that percent is almost Wal-Marts entire profit margin. If he is processing 200 payments of $1000/mo, that's $6000/mo in fees that he loses, or the equivalent of six entire rents! Dwolla, on the other hand, would cost him $50, or a 20X reduction in costs.
      - rscale 15y ago
        I accept payment electronically via Intuit Payment Network. It costs me $0.50 per transaction for bank payments, or 3.25% if I choose to allow credit card payments. No subscription charges, no setup fees, nothing.
        betterth 15y ago
        And Dwolla would still cost HALF of what you pay.
      - dustingetz 15y ago
        if google stopped providing free lunch, that's 20k employees times 250 lunches at $5/meal, or $25M. Give them a diet coke @ $0.20 instead for a 25x reduction in costs!!! that's more money saved than dwolla's entire busness! lets not deliberately de-normalize our figures, yeah?
rokhayakebe 15y ago
When Dwolla does this for consumer to consumer, internationally (US->other countries), they will eat Moneygram & Western Union's lunch, and diner, and breakfast, and snack.
- dangrossman 15y ago
  Or they themselves will be eaten by fraud of all scales coming from a million different places, like most of PayPal's competitors 10 years ago. The odds are not weighed in their favor.
  - rokhayakebe 15y ago
    Paypal, and other companies, have a pretty good handle on fraud now. They can aggressively hire security engineers from the industry.
- smackfu 15y ago
  Are those companies really doing that many web transactions? I assumed most of their business immigrants wiring cash home from storefront offices. Which Dwolla isn't really a competitor for.
dazbradbury 15y ago
Disclaimer: I've not read details on ALL the different payment platforms that are around, or the regulations when dealing in this market. With that said, why don't the platforms make it easy for merchants to pass these saving back onto the consumer. You can pay by credit card, but that would cost you 4% more than [insert payments system]. In that way, I'm incentivised as a merchant (more sales/discount with no loss), and as a consumer (real discount).
- oneplusone 15y ago
  I believe that is against the terms of service for Visa and Mastercard. If you were to offer such a discount they would simply cut off your access to credit cards. Edit: From the visa terms (http://www.fivecentnickel.com/2010/02/26/visa-credit-card-acceptance-guidelines/ http://www.fivecentnickel.com/2010/02/26/visa-credit-card-ac...) Merchants must always treat Visa transactions like any other transaction (with a minor exception). They may not impost a surcharge for using a Visa card, but can offer a cash discount. This discount cannot be offered for use of a “comparable card” such as a different credit card.
  - gregwebs 15y ago
    There are indirect ways of rewarding someone for not using a credit card - like providing a coupon for their next purchase (I saw that at Ikea before). Although if these loopholes gain in popularity the credit card companies could always revise their terms.
    - narcissus 15y ago
      Similar to how Canadian Tire gives 'Canadian Tire Money' when paying some way other than credit cards. The bonus is that a fair number of 'mom and pop' shops will accept Canadian Tire money as cash...
  - dazbradbury 15y ago
    I guess I had some idea such a clause existed, hence my up front disclaimer. Basically, it's just straight-up anti-competitive behaviour though.
gmaster1440 15y ago
I don't understand how they actually send you the cash immediately. Does it generate a temporary Debit card?
- gsiener 15y ago
  I believe it's doing a bank transfer.
- walkon 15y ago
  I believe if you are enrolled in Instant they will spot the money for any purchases you make beyond the amount you already have in your account, up to $500 worth. So it just enables you to use Dwolla for purchases without having to wait for a slow ETF transfer (around 3 days) from your bank to fund your Dwolla account.
latchkey 15y ago
You pay $3/month for the privilege of allowing them to front you cash for up to a month. If you are late, they charge you $5. No broken legs, no threats, just $5. According to one of the images 'simple terms apply'. What are those terms and why aren't they listed right now? That seems shady to make a big announcement and not clearly list all the terms. I've got a few questions: How much cash can I borrow? What happens if I'm late multiple months? What prevents me from closing my account and just walking away? I don't know, this seems like an awful idea to me. Rife for abuse. Dwolla will be one the receiving end of a lot of fraud really quickly and will be spending all their time and resources chasing down deadbeats. UPDATE: A 3rd party has more details than their own site [1]. Up to $500. Still seems rife for fraud to me because now they are going to have to chase down a lot of people for only $500. If my credit is good and my money management is sound, why would I need to pay $3 a month for the privilege of allowing me to get a loan for up to $500? [1] http://www.siliconprairienews.com/2011/12/dwolla-introduces-instant-gives-users-instant-access-to-line-of-credit http://www.siliconprairienews.com/2011/12/dwolla-introduces-...
- colinsidoti 15y ago
  Because they're avoiding "credit" entirely. I suspect this is the start of their own implementation of "credit", and they're comfortable with losing some money at the beginning. In the long run, the traction they gain from the good customers could/should be worth more than the money they lose. For the consumer, $3 on $500 is incredibly low interest.
  - gojomo 15y ago
    $3/month on $500 isn't 'incredibly' low: it's $36/year, on a net carried balance that's probably close to zero at least as often as it's close to the maximum $500. If you could time it just right, so that your balance was $499 29 days of every month, and $0 the one day that it needs to be, the effective rate would be around 7%, a fair but not great consumer credit rate. But if your balance is often closer to zero, and you ever trigger the late fee, the effective rate becomes much, much higher. It does compare favorably to foreign-ATM access fees.
nixxle 15y ago
I like Dwolla, I love the idea, I love no-fees-below-$10, I hate Paypal for all these reasons. And I can only hope for Dwolla to become available to merchants in Europe, but I'm not expecting it any time soon :(
deleted 15y ago
[deleted]
angryasian 15y ago
My question to merchants would be.. Would you actually risk sales at not offering credit card payments and only offering dwolla? With companies like square they make the entire process incredibly easy. Would you actually list two different prices on all your items or services based on paying with credit card vs dwolla, or would you just standardize and swallow the 3% or whatever it is ?
- wingspan 15y ago
  As someone mentioned in a previous thread on dwolla (re your second point), you don't list two different prices. When the customer is checking out, you give a cash discount if you use dwolla (e.g. 3% off your purchase if you use dwolla to pay!).
  - eridius 15y ago
    Are you even allowed to do that? I thought stores don't currently do that because the credit card companies have rules saying that you can't. Or does that not apply if you use Square?
    - marquis 15y ago
      Have you ever bought a plane ticket in Europe or Australia? They offer free transactions that are not credit-card based. It's fairly common to have an extra fee in a lot of non-US online and off-line stores.
      - radicalbyte 15y ago
        > They offer free transactions that are not credit-card based. If you're referring to RyanAir (and the other low-cost airlines), then they only offer free transactions on obscure payment types. From what I've seen the 'free' transaction type changes whenever a more obscure and impractical payment system becomes available. They do that so that they can legally advertise lower prices that they charge in practise.
latchkey 15y ago
I'm sorry, but there is nothing that is so compellingly 'Instant' about 'Instant' that it begs my $3/month ($36/year) for me to use it. As it stands now, if I want to buy something, I have several options. Use paypal, wepay, dwolla (regular) or some other similar provider, use a credit card, use a debit card, use cash, get someone else to buy it for me. None of which costs me anything to do the transaction. Sure, there is some noise about charging for debit cards, but that noise turned into massive backlash, so I don't think that'll happen anytime soon. Plus, there are still other options, like another bank with a debt card that doesn't cost me anything. Sure, a credit card has a fee associated with it and I probably end up paying that fee either in the price of the item I'm buying or directly. But at this point, is the total sum of those fees >$3/month? Maybe, but who really cares anymore? There is a cost to doing business and it can't be entirely free. That said, I'm going to support companies, like WePay, who are at least trying to put a good customer service experience on things and keeping their fees straightforward and relatively low. I can see how Dwolla is trying to disrupt the whole industry. I like that and I sure believe that it needs to happen. The credit card companies are essentially just another evil empire. ;-) That said, I don't think 'Instant' is the right product for this disruption. It isn't being marketed correctly at all. The documentation is missing from their website and the whole $500 thing seems like a gimmick that is only going to get them into a lot of fraud trouble.
- eridius 15y ago
  I dunno. I get an ATM charge once every month or two because I need cash so I can buy things at places that don't accept credit cards (or at places where I want to buy <$10 worth of stuff). I always end up drawing far more cash from the ATM than I want just to reduce the occurrence of these fees. Even one ATM fee per month will be more than Dwolla Instant (usually $2-$3 for the ATM and another $2 from my bank). If this feature encourages more stores to accept Dwolla, then it may become cost-effective to turn on Dwolla Instant and use that instead of carrying cash.
  - latchkey 15y ago
    There are banks that offer refunds for atm fees on their accounts. You should consider switching. A quick google found this [1], I'm sure there are more. [1] http://www.bankfox.com/c/no-atm-fees/ http://www.bankfox.com/c/no-atm-fees/
thinkcomp 15y ago
It looks like I'm just going to echo the sentiments of others on this thread, but I feel compelled to issue this warning: Stay away. This "feature" could bankrupt even a respectable company. Do not trust your money to any company offering credit that cannot or will not provide a balance sheet to back it up. Yes, I'm a competitor, but there's a very good reason my company did not and does not offer this service. We thought of it long ago, and long ago determined that even with small amounts of credit, the risk to the operator is astronomical. Stay away, stay away, stay away.
- chc 15y ago
  I don't quite understand. It sounds like you're saying this is weighted too heavily in favor of the user, so why are you telling the user to stay away? Shouldn't the warning be directed at Dwolla?
  - pbreit 15y ago
    The warning goes out to anyone who is or will be owed money by Dwolla (ie, mainly the merchants, or payers who pre-fund their Dwolla accounts). PayPal performs a similar service but backs it with a credit card. The risk is fraudsters setting up phony bank accounts, piling up a bunch of Dwolla credit, paying themselves and disappearing.
    - ricardobeat 15y ago
      In that case they only hurt Dwolla, not any merchants or payers. Their money seems to be legally secure: Dwolla warrants funds property of their respective account holder. Warranty is only respective of Dwolla balance amount under FDIC or NCUA insured funds covered by financial institutions holding funds on your behalf. I don't know what it's like in the USA, but setting up a "phony bank account" depends on a small list of crimes to be commited before...
      - pbreit 15y ago
        I believe if Dwolla had a rash of stolen funds, the insurance of its partner bank would not cover it (since the insurance covers the bank, not Dwolla). The US is much different from the rest of the world as far as I know. There are thousands of banks and even more non-banks that have established ACH routing numbers. Fraudsters look for banks or companies with the laxest account opening procedures. There are some notable payments companies that went out of business because of fraud (NextCard, BankOne EmoneyMail). When that happens, there's a very real possibility of customers losing money.
regularfry 15y ago
Hmm. If I'd been able to use this for margin on mtgox a few months back...
Vivtek 15y ago
OOOooohh, when Dwolla goes international I'm so very much saying goodbye to PayPal.
verroq 15y ago
International users need not to apply.
SolarUpNote 15y ago
Does anyone know if this is correct? If someone pays me $1000 with a credit card, I pay Visa $25 (2.5% transaction fee) If someone pays me $1000 with Dwolla, I Pay Dwolla 25 cents. That's what I could figure out, but it seems too good to be true.
- wmf 15y ago
  Yes, that's correct. Keep in mind that Dwolla is based on ACH which has lower fees than credit cards; besides that it's just statistics.
mikkom 15y ago
(I'll just copy my answer from reddit below) That was an odd article from northern european perspective. You really haven't had direct bank payments via web in US before this? We had those before web credit card payments and they are implemented by the banks themselves (it's a standard here, I have actually implemented some of this stuff with our company) The article also talks about rent payments.. You don't have automatic recurring payment option in your web bank interface? can you make payments from one bank account to other via web interface at all? (then someone answered that there are not bank-to-bank transfers or more advanced stuff like direct payments don't exists and I continued...) Wow that's odd. Just for comparison, people here would probably revolt if transfering money from one account to other would cost something. That's how everyone here pays bills. Before people would go to banks and make transfer form account to other to pay bills there, some 10-20 years ago banks themselves started to move all this to their web interfaces to reduce the need for physical locations (basically to cut costs). The whole europe is now moving to "SEPA" system where all bank accounts are standardized so from now on this can be done europe-wide. Sepa also has this new "e-payment" system that makes all kinds of things like direct billing possible EU-wide. http://www.europeanpaymentscouncil.eu/article.cfm?articles_uuid=BCFC9AFD-BDA2-FC9C-B434859EC6A9CC95 http://www.europeanpaymentscouncil.eu/article.cfm?articles_u...
- gcb 15y ago
  i feel you. in 3rd world Brazil we had all that. here, i kid you not: - they are just getting chips on credit cards - you pay your credit card that your own bank manages by transfering money from one account to credit card account... and that can take DAYS to show up. so I usually have to pay my credit card some 20 days before i would. - most bills came with an envelope for you to mail your check. - most people i know pay annuity on cc.
  - dotcoma 15y ago
    Not Brazilian here, but I wouldn't call Brazil Third World, and especially not their banking system.
    - 15y ago

It’s Instant

151 points by sant0sk1 15y ago

singingwolfboy 15y ago

So what? Why would I use Dwolla instead of a credit card?

jessegavin 15y ago
I can't think of any reason a consumer would benefit from this over a credit or debit card. Except maybe if they regularly overdraft and prefer a $5 fee to whatever their bank charges.
- dlsspy 15y ago
  What about the ones they list? Merchants having to pay a lot to process your money makes things more expensive. That affects you.
  - andrenotgiant 15y ago
    But for it to turn into a direct benefit for you, merchants would have to give you a discount for using Dwolla. Does that/can that happen?
    - jerguismi 15y ago
      That can't happen, since credit card companies won't allow this. However, some merchants could accept _only_ dwolla, which could change the game.
      - stickfigure 15y ago
        Don't discount the possibility that this might be fixed with legislation.
      - frankydp 15y ago
        CC would be against this but isn't the target merchant the one that does not already take CCs? Street merchant, plumber, kid that shovels my driveway, or wheeled merchant.
    - jessegavin 15y ago
      That's exactly my point. In order for me to want to use Dwolla (and pay the $3 set up) I would have to believe that enough merchants out there will let me pay with Dwolla that I would get some unique benefit for using it. Dwolla is awesome for merchants and neutral for consumers.
    - praxeologist 15y ago
      I give my customers rewards points for using Dwolla which they don't get when paying with other methods. I'm more of a small business and have to micromanage this all though. (I didn't know this is supposedly against CC terms too haha) I don't see why my average (online) customer is going to pay $3/mo for this, but then I am probably the only place they are using Dwolla. Also, I am very hands on with them and just take "their word" or fill an order when I get the notice that the 2-3 day travel of funds from their bank to Dwolla is good. Again, I think this Instant thing all ties back to the CU Exchange feature I discussed before. Dwolla tries to forge a sort of deal where this bank's customers get Instant without the $3/mo fee and Dwolla + the bank chop the other half of money made in "transit time interest". Long term, I see the success of Instant tied to this, banks being able to offer free Instant as a perk with an account with them, versus Instant used as a cheaper overdraft or standalone feature.
    - angryasian 15y ago
      this is exactly the point, unless merchants actually display the discount you receive vs using a credit card then it doesn't matter. More than likely merchants will swallow the profits, and consumers won't see the benefit. I earn quite a bit from rewards points as well, the difference in monetary savings vs credit cards would have to be proportional.
  - deleted 15y ago
    [deleted]
- pbreit 15y ago
  It's targeted more for situations where credit/debit cards are not currently accepted. For example, large transactions for professional services. Think of it more as replacing checks, not cards.
  - miles_matthias 15y ago
    That is one of the goals but the other goal is reducing the cost for the merchant. Merchants will prefer you to pay with Dwolla as opposed to a credit card because they don't give up as big of a fee on each transaction, this earning them more revenue.
    - pbreit 15y ago
      Maybe. But 2-3% is about the right price for a financial txn between strangers, especially when not face-to-face.
      - eridius 15y ago
        Why? Why should there be a percentage-based fee at all for financial transactions? This is an idea that credit card companies have pushed onto the world, but there's no reason it needs to be accepted as fact.
        pbreit 15y ago
        I didn't really mean all. I did say between strangers and especially when the two are not face-to-face. Two other qualifiers: 1) when "good funds" need to be transferred immediately and 2) for dollar ranges from around $10 to $1,000. This makes up the vast majority of retail commerce for which credit cards are so well suited and widely used. Best approach is to look for areas where credit cards are not widely used instead of trying to displace them in areas where they work really (really, really) well.
  - tryitnow 15y ago
    I've been wondering why I would use this and I think this comment hits the nail on the head. But why would want to pay $3? Big payments are usually pretty well-timed and don't need to be "instant." Hmmm, not sure where Dwolla is going with this, it seems to make more sense to laser focus on those who would find the most use for their product (big ticket buyers and sellers, not people buying a t-shirt on a whim).
oneplusone 15y ago
Because the merchant in question may not accept credit cards. For example, if I do contract work and invoice you for $8,000 I except the full amount. So if you were to pay with credit card it would cost you an extra 2.9%/$232 to pay me.
patio11 15y ago
The sweet spot is probably rent payments and the answer is "Because your landlord won't take a rent payment on a CC most of the time because their profit margins are only a little more than the CC fee."
- alsocasey 15y ago
  I can't imagine my landlord doesn't make more than 3% on my apartment every month...
  - eli 15y ago
    Well, we can speculate on the reasons, but I've rented maybe a dozen apartments, some from individuals and some from management companies, and none of them has ever offered to take credit cards.
  - betterth 15y ago
    I would certainly hope so! But why should your landlord shave off 3% of his ENTIRE revenue stream? I mean, that percent is almost Wal-Marts entire profit margin. If he is processing 200 payments of $1000/mo, that's $6000/mo in fees that he loses, or the equivalent of six entire rents! Dwolla, on the other hand, would cost him $50, or a 20X reduction in costs.
    - rscale 15y ago
      I accept payment electronically via Intuit Payment Network. It costs me $0.50 per transaction for bank payments, or 3.25% if I choose to allow credit card payments. No subscription charges, no setup fees, nothing.
      - betterth 15y ago
        And Dwolla would still cost HALF of what you pay.
    - dustingetz 15y ago
      if google stopped providing free lunch, that's 20k employees times 250 lunches at $5/meal, or $25M. Give them a diet coke @ $0.20 instead for a 25x reduction in costs!!! that's more money saved than dwolla's entire busness! lets not deliberately de-normalize our figures, yeah?

rokhayakebe 15y ago

When Dwolla does this for consumer to consumer, internationally (US->other countries), they will eat Moneygram & Western Union's lunch, and diner, and breakfast, and snack.

dangrossman 15y ago
Or they themselves will be eaten by fraud of all scales coming from a million different places, like most of PayPal's competitors 10 years ago. The odds are not weighed in their favor.
- rokhayakebe 15y ago
  Paypal, and other companies, have a pretty good handle on fraud now. They can aggressively hire security engineers from the industry.
smackfu 15y ago
Are those companies really doing that many web transactions? I assumed most of their business immigrants wiring cash home from storefront offices. Which Dwolla isn't really a competitor for.

dazbradbury 15y ago

Disclaimer: I've not read details on ALL the different payment platforms that are around, or the regulations when dealing in this market. With that said, why don't the platforms make it easy for merchants to pass these saving back onto the consumer. You can pay by credit card, but that would cost you 4% more than [insert payments system]. In that way, I'm incentivised as a merchant (more sales/discount with no loss), and as a consumer (real discount).

oneplusone 15y ago
I believe that is against the terms of service for Visa and Mastercard. If you were to offer such a discount they would simply cut off your access to credit cards. Edit: From the visa terms (http://www.fivecentnickel.com/2010/02/26/visa-credit-card-acceptance-guidelines/ http://www.fivecentnickel.com/2010/02/26/visa-credit-card-ac...) Merchants must always treat Visa transactions like any other transaction (with a minor exception). They may not impost a surcharge for using a Visa card, but can offer a cash discount. This discount cannot be offered for use of a “comparable card” such as a different credit card.
- gregwebs 15y ago
  There are indirect ways of rewarding someone for not using a credit card - like providing a coupon for their next purchase (I saw that at Ikea before). Although if these loopholes gain in popularity the credit card companies could always revise their terms.
  - narcissus 15y ago
    Similar to how Canadian Tire gives 'Canadian Tire Money' when paying some way other than credit cards. The bonus is that a fair number of 'mom and pop' shops will accept Canadian Tire money as cash...
- dazbradbury 15y ago
  I guess I had some idea such a clause existed, hence my up front disclaimer. Basically, it's just straight-up anti-competitive behaviour though.

gmaster1440 15y ago

I don't understand how they actually send you the cash immediately. Does it generate a temporary Debit card?

gsiener 15y ago
I believe it's doing a bank transfer.
walkon 15y ago
I believe if you are enrolled in Instant they will spot the money for any purchases you make beyond the amount you already have in your account, up to $500 worth. So it just enables you to use Dwolla for purchases without having to wait for a slow ETF transfer (around 3 days) from your bank to fund your Dwolla account.

latchkey 15y ago

You pay $3/month for the privilege of allowing them to front you cash for up to a month. If you are late, they charge you $5. No broken legs, no threats, just $5. According to one of the images 'simple terms apply'. What are those terms and why aren't they listed right now? That seems shady to make a big announcement and not clearly list all the terms. I've got a few questions: How much cash can I borrow? What happens if I'm late multiple months? What prevents me from closing my account and just walking away? I don't know, this seems like an awful idea to me. Rife for abuse. Dwolla will be one the receiving end of a lot of fraud really quickly and will be spending all their time and resources chasing down deadbeats. UPDATE: A 3rd party has more details than their own site [1]. Up to $500. Still seems rife for fraud to me because now they are going to have to chase down a lot of people for only $500. If my credit is good and my money management is sound, why would I need to pay $3 a month for the privilege of allowing me to get a loan for up to $500? [1] http://www.siliconprairienews.com/2011/12/dwolla-introduces-instant-gives-users-instant-access-to-line-of-credit http://www.siliconprairienews.com/2011/12/dwolla-introduces-...

colinsidoti 15y ago
Because they're avoiding "credit" entirely. I suspect this is the start of their own implementation of "credit", and they're comfortable with losing some money at the beginning. In the long run, the traction they gain from the good customers could/should be worth more than the money they lose. For the consumer, $3 on $500 is incredibly low interest.
- gojomo 15y ago
  $3/month on $500 isn't 'incredibly' low: it's $36/year, on a net carried balance that's probably close to zero at least as often as it's close to the maximum $500. If you could time it just right, so that your balance was $499 29 days of every month, and $0 the one day that it needs to be, the effective rate would be around 7%, a fair but not great consumer credit rate. But if your balance is often closer to zero, and you ever trigger the late fee, the effective rate becomes much, much higher. It does compare favorably to foreign-ATM access fees.

nixxle 15y ago

I like Dwolla, I love the idea, I love no-fees-below-$10, I hate Paypal for all these reasons. And I can only hope for Dwolla to become available to merchants in Europe, but I'm not expecting it any time soon :(

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angryasian 15y ago

My question to merchants would be.. Would you actually risk sales at not offering credit card payments and only offering dwolla? With companies like square they make the entire process incredibly easy. Would you actually list two different prices on all your items or services based on paying with credit card vs dwolla, or would you just standardize and swallow the 3% or whatever it is ?

wingspan 15y ago
As someone mentioned in a previous thread on dwolla (re your second point), you don't list two different prices. When the customer is checking out, you give a cash discount if you use dwolla (e.g. 3% off your purchase if you use dwolla to pay!).
- eridius 15y ago
  Are you even allowed to do that? I thought stores don't currently do that because the credit card companies have rules saying that you can't. Or does that not apply if you use Square?
  - marquis 15y ago
    Have you ever bought a plane ticket in Europe or Australia? They offer free transactions that are not credit-card based. It's fairly common to have an extra fee in a lot of non-US online and off-line stores.
    - radicalbyte 15y ago
      > They offer free transactions that are not credit-card based. If you're referring to RyanAir (and the other low-cost airlines), then they only offer free transactions on obscure payment types. From what I've seen the 'free' transaction type changes whenever a more obscure and impractical payment system becomes available. They do that so that they can legally advertise lower prices that they charge in practise.

latchkey 15y ago

I'm sorry, but there is nothing that is so compellingly 'Instant' about 'Instant' that it begs my $3/month ($36/year) for me to use it. As it stands now, if I want to buy something, I have several options. Use paypal, wepay, dwolla (regular) or some other similar provider, use a credit card, use a debit card, use cash, get someone else to buy it for me. None of which costs me anything to do the transaction. Sure, there is some noise about charging for debit cards, but that noise turned into massive backlash, so I don't think that'll happen anytime soon. Plus, there are still other options, like another bank with a debt card that doesn't cost me anything. Sure, a credit card has a fee associated with it and I probably end up paying that fee either in the price of the item I'm buying or directly. But at this point, is the total sum of those fees >$3/month? Maybe, but who really cares anymore? There is a cost to doing business and it can't be entirely free. That said, I'm going to support companies, like WePay, who are at least trying to put a good customer service experience on things and keeping their fees straightforward and relatively low. I can see how Dwolla is trying to disrupt the whole industry. I like that and I sure believe that it needs to happen. The credit card companies are essentially just another evil empire. ;-) That said, I don't think 'Instant' is the right product for this disruption. It isn't being marketed correctly at all. The documentation is missing from their website and the whole $500 thing seems like a gimmick that is only going to get them into a lot of fraud trouble.

eridius 15y ago
I dunno. I get an ATM charge once every month or two because I need cash so I can buy things at places that don't accept credit cards (or at places where I want to buy <$10 worth of stuff). I always end up drawing far more cash from the ATM than I want just to reduce the occurrence of these fees. Even one ATM fee per month will be more than Dwolla Instant (usually $2-$3 for the ATM and another $2 from my bank). If this feature encourages more stores to accept Dwolla, then it may become cost-effective to turn on Dwolla Instant and use that instead of carrying cash.
- latchkey 15y ago
  There are banks that offer refunds for atm fees on their accounts. You should consider switching. A quick google found this [1], I'm sure there are more. [1] http://www.bankfox.com/c/no-atm-fees/ http://www.bankfox.com/c/no-atm-fees/

thinkcomp 15y ago

It looks like I'm just going to echo the sentiments of others on this thread, but I feel compelled to issue this warning: Stay away. This "feature" could bankrupt even a respectable company. Do not trust your money to any company offering credit that cannot or will not provide a balance sheet to back it up. Yes, I'm a competitor, but there's a very good reason my company did not and does not offer this service. We thought of it long ago, and long ago determined that even with small amounts of credit, the risk to the operator is astronomical. Stay away, stay away, stay away.

chc 15y ago
I don't quite understand. It sounds like you're saying this is weighted too heavily in favor of the user, so why are you telling the user to stay away? Shouldn't the warning be directed at Dwolla?
- pbreit 15y ago
  The warning goes out to anyone who is or will be owed money by Dwolla (ie, mainly the merchants, or payers who pre-fund their Dwolla accounts). PayPal performs a similar service but backs it with a credit card. The risk is fraudsters setting up phony bank accounts, piling up a bunch of Dwolla credit, paying themselves and disappearing.
  - ricardobeat 15y ago
    In that case they only hurt Dwolla, not any merchants or payers. Their money seems to be legally secure: Dwolla warrants funds property of their respective account holder. Warranty is only respective of Dwolla balance amount under FDIC or NCUA insured funds covered by financial institutions holding funds on your behalf. I don't know what it's like in the USA, but setting up a "phony bank account" depends on a small list of crimes to be commited before...
    - pbreit 15y ago
      I believe if Dwolla had a rash of stolen funds, the insurance of its partner bank would not cover it (since the insurance covers the bank, not Dwolla). The US is much different from the rest of the world as far as I know. There are thousands of banks and even more non-banks that have established ACH routing numbers. Fraudsters look for banks or companies with the laxest account opening procedures. There are some notable payments companies that went out of business because of fraud (NextCard, BankOne EmoneyMail). When that happens, there's a very real possibility of customers losing money.

regularfry 15y ago

Hmm. If I'd been able to use this for margin on mtgox a few months back...

Vivtek 15y ago

OOOooohh, when Dwolla goes international I'm so very much saying goodbye to PayPal.

verroq 15y ago

International users need not to apply.

SolarUpNote 15y ago

Does anyone know if this is correct? If someone pays me $1000 with a credit card, I pay Visa $25 (2.5% transaction fee) If someone pays me $1000 with Dwolla, I Pay Dwolla 25 cents. That's what I could figure out, but it seems too good to be true.

wmf 15y ago
Yes, that's correct. Keep in mind that Dwolla is based on ACH which has lower fees than credit cards; besides that it's just statistics.

mikkom 15y ago

(I'll just copy my answer from reddit below) That was an odd article from northern european perspective. You really haven't had direct bank payments via web in US before this? We had those before web credit card payments and they are implemented by the banks themselves (it's a standard here, I have actually implemented some of this stuff with our company) The article also talks about rent payments.. You don't have automatic recurring payment option in your web bank interface? can you make payments from one bank account to other via web interface at all? (then someone answered that there are not bank-to-bank transfers or more advanced stuff like direct payments don't exists and I continued...) Wow that's odd. Just for comparison, people here would probably revolt if transfering money from one account to other would cost something. That's how everyone here pays bills. Before people would go to banks and make transfer form account to other to pay bills there, some 10-20 years ago banks themselves started to move all this to their web interfaces to reduce the need for physical locations (basically to cut costs). The whole europe is now moving to "SEPA" system where all bank accounts are standardized so from now on this can be done europe-wide. Sepa also has this new "e-payment" system that makes all kinds of things like direct billing possible EU-wide. http://www.europeanpaymentscouncil.eu/article.cfm?articles_uuid=BCFC9AFD-BDA2-FC9C-B434859EC6A9CC95 http://www.europeanpaymentscouncil.eu/article.cfm?articles_u...

gcb 15y ago
i feel you. in 3rd world Brazil we had all that. here, i kid you not: - they are just getting chips on credit cards - you pay your credit card that your own bank manages by transfering money from one account to credit card account... and that can take DAYS to show up. so I usually have to pay my credit card some 20 days before i would. - most bills came with an envelope for you to mail your check. - most people i know pay annuity on cc.
- dotcoma 15y ago
  Not Brazilian here, but I wouldn't call Brazil Third World, and especially not their banking system.
  - 15y ago