Dwolla, The New E-Commerce Solution

The recent outbreak of alternative financial transaction services hasn’t yet caused giants like PayPal and Ebay to need reputation protection, but they may be looking to revamp their business models soon. The new kid on the block, Dwolla, threatens to shake things up in an industry that seems to change by the year. Dwolla, the new U.S. only e-commerce company headquartered in Des Moines, Iowa, is the latest challenger to take on PayPal in the online payment industry. Founded in 2008, the Dwolla didn’t officially launch its service until 2010 but has been growing steadily since then, reaching 20,000 users as of June 2011.

Dwolla’s major notable features are the absence of credit cards and low transaction fees (25 cents per, plus every transaction under $10 is free), and no percentage of the transaction, which is how they aim to put up a fight against PayPal. Other features include free micro-transactions (which can help with things like splitting bar tabs), the ability for individual users to send money through social networks, and the ability for users to complete transactions with their phones. Users are also able to do all of the aforementioned with the assurance of stringent anti-fraud technologies. Also, Dwolla recently rolled out its FiSync integration, by which the company intends to offer instantaneous transactions.

Dwolla’s prize horse, so to speak, would have to be its social media integration, which is cutting edge and relevant to a new generation of consumers. In addition to being able to send money through social networks, you can also sync your Facebook, Twitter, and LinkedIn connections and get automatic Foursquare check-in at any place you spend money. Dwolla also prizes itself on the transparency of its underlying infrastructure funding, meaning no anomalous charges. It also means that merchants won’t be inundated in fine print and mysterious legalese.

The insistence on no credit cards informs what it views as a service that works well for businesses and non-profits. Small, social media-friendly businesses especially can take advantage of the service’s Proxi-enabled system, Dwolla virtual Kiosk, the Dwolla Merchant app, and its free, real-time verification at locations. Dwolla is also aggressively developing integrated point-of-sale capabilities.

Perhaps unsurprisingly, Dwolla seems to have found support people in the Bitcoin community. While Dwolla does not endorse the decentralized electronic currency system, they have made it possible for its users to sell Bitcoin and easily transfer amounts between the two. The interest taken in Dwolla among Bitcoin users underscores a general revolution taking place in the digital currency industry right now. Consumers want less intermediary action taken in financial actions. Dwolla stands to be a major beneficiary of this revolution, thanks to its clever media integrations.

Article contributed by Jenna Smith