Dwolla is a tiny 12-person startup founded by 28-year-old Ben Milne. The company is looking to change the way money is being transferred by sidestepping credit cards completely. This is different than what PayPal offers and incredibly more powerful.
I really love the ground-up approach Ben employs, the way he disregards the status quo that others have avoided questioning for over 30 years. Here's a snippet from an interview with the founder:
Why hasn't anyone side-stepped the credit card companies before?
I think a lot of it is timing and luck. And a little bit of getting your foot in the door. One of our investors is a $1.8 billion financial institution. That's atypical anywhere, let alone in Iowa. Having them on board allowed us to get into a lot of rooms.
We serve everyone from the landlord taking in one payment to the individual buying a coffee with their cellphone, to billion-dollar corporations. Because we're so atypical and look at mobile payments differently, we got in the room with the Federal Reserve and the U.S. Treasury who allowed us to have a conversation, not only from a corporate standpoint, but from a government monetary distribution standpoint.
All banks are connected by one ACH system. Credit card companies utilize that same system to pay off your credit card charges. Banks internally set along that same system to move money in their own banks. This system in its own right is riddled with flaws — tons of fraud issues and waste and delays. If you've ever had a payment take a few days to clear, its because they're waiting on that ACH system.
We want to fix that system between the banks, take out the delays and make it instant. If we can create this ubiquitous cash layer of distribution between consumers and merchants and developers and financial institutions, that actually fixes the problem.
No one has built a payment network in 30 years — since credit cards. Everybody has concentrated on how we build a portal for credit cards, from digital wallets to Square.
We don't believe in credit cards. We believe in authorization and in lower cost transfers. Our generation actually understands that when you buy sh*t, it comes out of your bank account and you have to pay for that.