What is Dwolla?
Although Dwolla was originally a P2P bank transfer platform catered to businesses, it is now an ACH payments facilitator. Since then, the company has developed a PayPal-like service that merchants and consumers could use to a platform that will primarily benefit huge businesses that handle many B2B transactions or require some of the company’s specialized services, such as mass payout support. Unlike almost every merchant services provider we’ve looked at, Dwolla does not accept credit or debit cards. Unlike Square, the company is not a merchant account provider or a payment service provider (PSP). Its bank transfer-only business model was created specifically to avoid the significant credit card associations’ high interchange fees. As a result, you won’t be able to get support for credit card terminals or point-of-sale (POS) systems. Dwolla also does not support the check scanners used to convert a paper check into an electronic check payment.
You won’t be allowed to use credit or debit cards, cryptocurrency, PayPal, or any of the other various online payment options that have emerged. It’s just plain and straightforward bank transfers. So, how does Dwolla deal with ACH transactions? It’s similar to a digital wallet (like Venmo or CashApp), designed for B2B payments rather than P2P transactions. You can send, receive, and facilitate payments with a Dwolla account. Suppose you’re wondering what “facilitate payments” means. In that case, it simply means that you can create a platform that allows users to send money to one another without you, the merchant, having to do anything. (As a bonus, you can monetize the platform by charging a facilitator’s fee for the transaction.) You can also keep balances in Dwolla, just like a digital wallet. If there’s one good reason to accept ACH payments, it’s to make recurring payments possible. Dwolla, as you might expect, accepts regular payments. These fees are also compatible with metered billing, which charges a monthly variable amount based on usage. This is perfect for utility billing, but it can be applied to any usage-based service. Unlike PIN debit payments, ACH transactions typically lack a built-in function to verify that a customer’s account has sufficient funds before attempting a withdrawal. Before debiting funds, Dwolla allows you to check the balance on a customer’s account (with their permission, of course).
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