Alternative to Paypal: Dwolla

If you’re a tech start-up, you’re based in Silicon Valley, right?  Right.  Some of the time.  But payment transfer company Dwolla is based in Iowa, and that particular purview may be part of the reason that the company is just different.

Launched in 2010, Dwolla is, of course, a competitor of Paypal.  Whereas Silicon Valley is the fast lane and the Midwest strikes many as leisurely, Dwolla’s cachet is speed.  It built its own network from scratch, not having credit card companies as middlemen.  This means it can make instantaneous transfers.  Here’s a point-by-point comparison between Dwolla and Paypal.

                                                      DWOLLA                                           PAYPAL

TRANSACTION FEES              25 cents/ no fee                                   2.9% + 30 cents

for transactions less than $10

TRANSACTION LIMITS         personal: $5,000                                 $10,000

business: $10,000

MOBILE ACCESS                      Yes, with Dwolla Mobile app.           Paypal Here app

requires credit card reader;

fees apply

PAYING IN BATCHES            Pay up to 2,000 parties at once        Pay up to 250 parties at once

At the close of 2012, Dwolla was able to boast 250,000 registered users.  That puts it well behind Paypal and its 110 million.  Further, the payment solutions field is very, very crowded.  That’s one reason it’s nice to be out in the Heartland, far from the high rents on the coasts.

The company has engaged in a few recent developments aimed at providing the best and most competitive services possible.  This Spring, it joined forces with to create an e-invoice system.

Last fall, the alternative to Paypal launched a credit option, partnering with Comenity Capital Bank to allow Dwolla users to make purchases through its network without an actual credit card.

Other wrinkles of note are that a Dwolla account comes with a free HubPages account, and as with many other payment services, it does provide a “Pay with Dwolla” button for websites.

Conversely, the payment method can also be made an option with brick and mortar businesses.

Dwolla is attractive to many users due to its simplicity and lightweight fees.

The business continues to grow and develop, and serves as one reminder—among many—that there are many alternatives to Paypal, as well as alternatives to the alternatives.