• 11.30.12

Payments Service Dwolla’s Latest Innovation: Turning Invisible

On Friday, Dwolla launched features that take the focus off of its brand and instead complement its goal of powering transactions behind the scenes.

Payments Service Dwolla’s Latest Innovation: Turning Invisible

If the idea of an ideal payments system is that it never gets in the way of you getting what you want, then Dwolla is taking a step in the right direction: It’s setting its users free from its brand.


As of Friday, anybody can use the service to transfer money directly from their bank account to others without setting up a Dwolla account. And no longer do they need to launch a Dwolla app in order to pay at a Dwolla merchant’s offline store.

“Essentially we just do the dirty work,” Dwolla founder and CEO Ben Milne tells Fast Company. “We’re kind of removing ourselves from the equation a little bit, but we don’t really feel like owning the account holder is anywhere near as important as facilitating more exchanges. “

Des Moines-based Dwolla has about 100,000 account holders that make between $30 million and $50 million transactions every month. Because it cuts out third-party players like credit card companies and payment processors, the startup charges an appealing transaction rate. Transactions less than $10 are free. Transactions of any greater amount cost $.25.

In an industry where trust is a large factor, the startup has necessarily built a brand–including apps, consumer accounts, and a website–around its payments service. It’s bigger goal is not, however, to necessarily become a consumer-facing service, but to power transactions within consumer-facing services from behind the scenes. It doesn’t necessarily want to compete with Square, but power some transactions within it. Unlike payments API provider Stripe, which similarly allows third-party developers to install payment capabilities, Dwolla removes credit card numbers from the process, creating a new type of transaction. There are applications for the technology such as financial services that don’t involve a checkout button at all but use the same engine to move money for other purposes, like lending or peer-to-peer payments.

Milne calls Friday’s new features “one in a series of steps that essentially removes Dwolla’s consumer brand a little bit.”

Setting up a full-fledged Dwolla account takes three to five days. Now anyone can pay a merchant with Dwolla instantly and without opening an account, provided that merchant has installed the new guest checkout option. Similarly, a newly announced point-of-sale API makes it easier for merchants to accept Dwolla payments offline. Rather than launching a Dwolla app, users simply get a push notification to verify their purchase. Both features remove barriers to entry and decrease interaction with the Dwolla brand simultaneously. Says Milne:


“There’s a certain amount of hubris when you first get started that you always want to be the person who controls the experience. The reality is that we’re really great at getting money from point A to point B in a really cost-effective, really safe way, and that action doesn’t happen on one website in the Internet. It happens all over the Internet. It’s not going to happen in one store, in one app.”

[Image: Flickr user Allison Rose]

About the author

Sarah Kessler is a senior writer at Fast Company, where she writes about the on-demand/gig/sharing "economies" and the future of work.