Dwolla - bye bye paypal, bye bye credit cards?

redeye_uk · 11 Nov 2011 at 14:23

With Dwolla, payments are made directly from your bank account. No credit or debit cards are allowed. And because they don't exist in the system, we don't have to bring the fees into the system.

You can spend any amount of money and when you do that, the person on the other end doesn't have to pay 1, 2, 3 or 4%. They only pay $0.25 a transaction, which is especially helpful when it's $1,000, $2,000 or $5,000 transactions. Obviously PayPal becomes very cost prohibitive with those larger transactions.

http://www.businessinsider.com/this...nt-exist-in-the-next-few-years-2011-11?page=1

Seems like a very smart and innovative idea. Still early days yet, but could this be the future of online, and offline, payments?

When are OcUK getting onboard?

GravyMonster · 11 Nov 2011 at 14:25

If the banks lose their fees on charges, they'll just transfer it somewhere else.

Probably by adding massive 'setup fees' etc. for those who want to use this, to make it only worthwhile to those with a high volume of transactions.

Still pretty cool though.

ntg · 11 Nov 2011 at 14:26

I can't see how he competes with credit cards.

CCs provide you with credit because you
a) don't have,
b) don't want,

to spend cash. So since Dwolla takes money from your bank account it really doesn't serve the same purpose.

I don't think it's going to get any serious traction because the big players in the field won't let it. Whenever you have an innovative idea you need to think who it affects positively and who negatively. If your competitors will be losing money they will make it ultrahard for you to succeed. You need to find something that adds value across the chain of supply, not just at the end.

Why would banks support this if they are going to lose out on fees?

tricky, very tricky.

Nexus · 11 Nov 2011 at 14:31

The majority of the transactions I use PayPal for are eBay where there are fees associated with it. Given that eBay own PayPal, they aren't going to let a rival come in as a payment method.

redeye_uk · 11 Nov 2011 at 14:33

If the banks lose their fees on charges, they'll just transfer it somewhere else.

Sounds like one of the major backers is a bank.

Nexus said:
The majority of the transactions I use PayPal for are eBay where there are fees associated with it. Given that eBay own PayPal, they aren't going to let a rival come in as a payment method.

I dont see how ebay could stop them. Ebay allow bank transfers, cash etc?

Ironic Namesake · 11 Nov 2011 at 14:38

redeye_uk said:
Sounds like one of the major backers is a bank.

I dont see how ebay could stop them. Ebay allow bank transfers, cash etc?

But PayPal is fully integrated into eBay - no need to waste time using different payment options etc. can't see this happening with a system not owned by eBay

steve-h · 11 Nov 2011 at 14:52

Sounds promising

darael · 11 Nov 2011 at 15:43

Definitely something I'll be keeping an eye on. Paying almost instantly in shops, which it already knows by GPS, is a very good idea - walk into shop...£1.23 please...confirm store details then enter PIN and amount on phone...walk out.

moogle · 11 Nov 2011 at 15:51

redeye_uk said:
Sounds like one of the major backers is a bank.

I dont see how ebay could stop them. Ebay allow bank transfers, cash etc?

Well knowing eBay/Paypal I'm sure they'd put something in their T&C prohibiting such payment methods and banning members circumventing that. There was something like that I read about them doing to Google Checkout (had to google it as I forgot the name of it

).

Anyway even if they don't I can't see what makes it any different than Bank Transfers or Cash over eBay. You still got no protection.

Plus kgi makes some good points. People use the credit card because they can pay in ~2 months time rather than right away.