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 Funds in a Dwolla account can be withdrawn to a bank account or by sending a money transfer to another Dwolla member.
Dwolla is transacted frequently on the #bitcoin-otc marketplace and is one of the methods available for adding funds to an account with the MtGox exchange.
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.
Fees
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.
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 two to five business days.
Withdrawing funds from Dwolla to a bank account could complete the next business day however waiting two to three business days before the transaction completes is possible as well.
Dwolla has introduced a hybrid ACH service which eliminates the delay however only a very limited number of banks are using that service as of May, 2011.
Limits
For personal accounts there is a $5,000 per-transaction limit. Business accounts have a $10,000 per-transaction limit.[1]
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[2] 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.