Dwolla, Popular EDI for online B2C transactions

Dwolla, whose name is a slangified portmanteau of sorts between the words “dollar” and “web,” represents a formidable alternative to PayPal. Designing its own network from the ground up, Dwolla bypassed many of the traditional channels and built something cheaper, faster and safer than anything that previously existed. This creates a huge channel and market pricing advantage for Dwolla.

i)                    Dwolla charges only 25¢ per transaction, and any transaction of $10 or less is free. Compare this with the average 2.9 percent + 30¢ that PayPal charges on each “goods and services” transaction. (PayPal allows you to send money to friends and family from a bank account for free.)

ii)                   Both PayPal and Dwolla allow you to move money to a bank account. Dwolla does this as quickly as the same day (however, in some circumstances it can take up to three days); while PayPal consistently takes 2-4 days to move money.

iii)                 Dwolla allows mass payments of up to 2,000 recipients; PayPal limits the number of recipients to 250.

iv)                 PayPal limits total daily transactions to $10,000. Dwolla sets its per transaction limit at $5,000 for personal accounts and $10,000 for business. However, in special circumstances, it allows organizations to transfer up to $50 million in a single transaction… yes, for just 25 cents!

It is difficult to innovate in the payment space, but Dwolla’s proprietary network allows users to send money to email addresses, phone numbers and social connections on Facebook, Twitter and LinkedIn and to any business that chooses to accept it. You can send money to anyone – but recipients need to set up a Dwolla account to claim funds.