Dwolla

Dwolla is an e-commerce business allowing payments and money transfers to be made through the Internet.

A Dwolla account can be funded with electronic debits from a bank account or by receiving a money transfer from another Dwolla member. Funds in a Dwolla account can be withdrawn to a bank account or by sending a money transfer to another Dwolla Member.

The fee for transferring money to another Dwolla member is a fixed $0.25 per transaction. The sender can choose to pay the fee or to have the fee deducted from the amount sent.

Dwolla Corp, located in Des Moines, Iowa, is registered as a money transmitter in Iowa and provides accounts only to those who bank in the United States.

Money Transfer

Dwolla funds are transferred only to another Dwolla account. Dwolla allows a pending payment notice to be sent through Facebook and Twitter to notify a recipient who may or may not already be a Dwolla member, however for the recipient to claim the funds, the recipient must establish an account on Dwolla.

Timeline

When available funds are transferred from one Dwolla account to another, the recipient has access to the funds immediately. If transfer is made where funds must first be drawn from the sender's bank account, the recipient will not be notified of a transaction until the underlying funding transaction has completed, a process that can take from three to five business days.

Payment Hub

A Dwolla Hub is an optional service that assists in requesting a payment. Once enabled, the account holder can request money from anyone simply by providing the address to the account holder's hub page. For example, the founder of Dwolla has his own hub page.

The Dwolla Experiment

In January 2011 Dwolla started The Dwolla Experiment, a viral marketing initiative. Those following the Twitter account @DwollaX are gifted an amount that varies from $1 to $5 Dwollas. Offers to trade Dwolla for bitcoins have appeared on Bitcoin-OTC thus this giveaway was promoted to Bitcoin users.

Risks

ACH fraud can occur (e.g., stolen account used to make payments, account holder falsely disputes a transaction they had authorized, etc.) so there is the risk of ACH chargebacks. In some circumstances, an ACH chargeback can occur within 180 days of the transaction. Payment cards (neither credit card nor debit card) are not used to fund Dwolla accounts thus the relatively common payment card chargeback is not a factor for Dwolla transactions.