This week, Des Moines-based online and mobile payment service Dwolla launched nationally. Members of this service link their bank account to Dwolla and can then send small cash payments to other Dwolla members from a website, social media network or mobile device for a flat, 25-cent fee.
Two things distinguish this payment service from existing providers such as PayPal: its low transaction cost and its credit union backing.
According to the Associated Press, Dwolla founder Ben Milne created the service because he owned an audio equipment business and disliked the high fees he paid credit card companies to process purchases. The wire service says Milne has received $1 million in venture capital from the Veridian Credit Union and The Members Group, which provides transaction processing and other financial services. "The affiliation means deposits held in Dwolla accounts are insured by the FDIC and the National Credit Union Administration," the article states. "Its transactions are secured by the same technology that protects online banking systems."
As with PayPal and credit cards, the Dwolla logo appears as a payment option at checkout on a web page. Dwolla says its service can be easily integrated with programs like Facebook and Twitter, allowing friends to send each other money for the same 25-cent transaction fee. It also works with iPhone, iPad and Android mobile devices.