This post was inspired by something my buddy Max wrote last week. I am in no way affiliated with Dwolla, and don’t get anything for writing this post.
By now I think there’s pretty widespread consensus that it’s time for a legitimate competitor to Paypal to emerge.
In 2000 when Paypal saw a huge rise in use and popularity to due to the online craze that was (and is) eBay, it was a game changer. It made it easy and secure for anyone to transfer money on the internet.
It was responsible for an extremely difficult task of getting the average public to be ok with sending money over the internet, and paved the way for every other e-commerce store on the internet today.
Those times have come and gone, and while nearly every single industry online has seen fast paced evolution, making sites and services better and better, Paypal has stood the test of time. Meaning, there has yet to be a legitimate competitor that makes it easy to transfer cash from one person to another.
Enter Dwolla. Founded in Des Moines in 2008 it’s the closest service I’ve seen that comes close to giving Paypal a run for it’s money.
The Beauty of Dwolla
Dwolla was originally created for one purpose, to easily transfer cash from one person to the other. With Paypal, you pay 3% on most transactions.
For every sale of Location Rebel for instance, I give them around $9. I’ve always been (relatively) ok with that, and chalked it up to the cost of doing business.
However, it really hit me how much money I was losing when our HDR photography site started doing well. My business partner Max and I were losing $30-60/month simply from Paypal transaction fees when we transferred money to each other. This continued to add up, especially as the site became more successful.
Then we discovered Dwolla. What’s the beauty of it? No matter how large the transaction is, the fee is only $.25. If it’s under $10, it’s free.
These days no matter how many thousands of dollars we bring in, the fee to pay each other is just a quarter.
If you’re doing business online, this is unheard of. However it works for them because they are a completely cash based system, and thus there are no credit card fees.
So far I’ve used it with Max, to pay some Location Rebel affiliates, and collect consulting fees. Over the past 6 months it’s saved me over $500 in Paypal fees.
I like it so much in fact, that I’m making it the primary payment method for my upcoming project Hacking the High Life, which comes out a week from today.
Other Reasons Why Dwolla is Great
This post was originally inspired by Max’s article, “Why the Dwolla Button Could Revolutionize Blogging“. What is the Dwolla button you might be wondering? Glad you asked.
Essentially it could be the first tool that that will make micropayments a reality both online and offline. Did you enjoy this article? Want to buy me a beer for helping you discover a cool new tool for your business?
Boom. Just like that you can pay people online, no fees, no charges, no hassle. To take it even further some bars in Iowa have it set up so you can pay for your drinks with a Dwolla app.
Not to mention you can setup recoccuring payments, and they have an API for developers.
There are still a few very notable downsides to Dwolla however.
First, it’s only in the U.S. right now, so if you’re across the pond, you’re still out of luck at the moment. There’s also the issue of user base. In a recent Twitter conversation my buddy Karol mentioned he loved the service, but didn’t know anyone else that used it, thus making it way less awesome.
However that’s what I’m trying to change with this blog post. I rarely will go so far as to write a whole post for a product or service, especially when there’s absolutely nothing in it for me. But I really believe in this company. I believe in the dire need for an alternative to Paypal, and I really think Dwolla could be the service to do it.
What do you think? Have you used Dwolla? Do you like it? Not like it? Tell us about it in the comments!