Everybody sh*t their pants when Square came out. Anybody can handle credit card transactions using their phone? I can get that little white iPhone attachment for free?
In our humble abode in Venice, California, one of my roommates happens to have Square, which makes owing him money very convenient. If I owe him money, he needs it immediately, and I don’t have cash on me, Square is our solution. The biggest problem with square as a personal solution is that the payee needs to have the little white thingy on him (doesn’t work for dinners out). Also, the payer needs to have his credit card (which will eventually become obsolete?).
Out of nowhere comes Dwolla, which I most recently read about on Business Insider. The interview with Ben Milne, the founder, is a good read. Basically, here are the key points you need to know:
– Dwolla only charges $0.25 for any transaction, even $1000s of dollars big. This is cheaper than Square or Paypal.
– Only the payer needs to have a Dwolla account to send money.
– You can send money vie email, phone, or Facebook. Sending money to a friend is as easy as finding them on Facebook.
– Dwolla is side-stepping credit card companies, rather working directly with the ACH system (Automated Clearing House – Wikipedia). This is how they’re able to keep costs so low.
– They were able to do the above because their first investors includes a Credit Union and another company that provides credit, debit, ACH and security solutions to banks and credit unions.
– They’re taken so seriously, they’ve already sat down with both the Federal Reserve and the US Treasury to talk about their solution, from a government monetary distribution standpoint.
– At one point, they had a 700 name list of interested investors.
– They did all of this out of Des Moines, Iowa, where they still reside.
Long story short, as the title of this blog post suggests, Dwolla gets my vote as the most badass payment solution startup as of now.
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