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Dwolla Raises $16.5M from Andreessen Horowitz

blog.dwolla.com

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Re: Dwolla Raises $16.5M from Andreessen Horowitz

#31

Post by techbody »

reaclmbs wrote: post #25
nym wrote: post #22

How is Dwolla better than bitcoin? It seems like it has the same drawbacks of credit cards (chargebacks), without very much benefit. Maybe I'm missing a killer feature, but Dwolla doesn't seem all that interesting, just another paypal competitor.

Dwolla better than Bitcoin? Way, way better marketed. Better UX. Dwolla can improve its tech stack and have it be the UX layer on top of Bitcoin if it chooses. I guarantee you there are folks at Dwolla working on this. Dwolla = front end of payment protocol. Dwolla = bank? Competing payment protocols = Bitcoin; Bank routing/Swift + Forex. There were efforts to abstract gold into a payment protocol in the 90s but they…

two different bets- one is series C, one is seed.

Re: Dwolla Raises $16.5M from Andreessen Horowitz

#33

Post by dangrossman »

jyu wrote: post #15
benatkin wrote: post #11

Earlier quoted context omitted.

That was part of it. The main takeaway for many is that Dwolla is super friendly until you actually need to get your money out of it. I tried to get my $18 out of it but they insist on giving them a scan of my drivers license, a requirement that they didn't have at the time I signed up.

When the entity is defined as a money transmitter, you need to abide by their legal requirements. One of those includes having photocopies of government issued id. They choose to lower the initial barrier to sign up at the expense of a bad one time user experience for getting the money out.

Dwolla does not call itself a money transmitter, and is not licensed as one. Many people feel they're wrong, but to every state that's inquired, they've argued that they're only acting as an agent for the recipient of money, and are not transmitting money themselves.

Re: Dwolla Raises $16.5M from Andreessen Horowitz

#34

Post by crisnoble »

nym wrote: post #22

How is Dwolla better than bitcoin? It seems like it has the same drawbacks of credit cards (chargebacks), without very much benefit. Maybe I'm missing a killer feature, but Dwolla doesn't seem all that interesting, just another paypal competitor.

Dwolla is one of the many ways you can transfer money from your bank into Mt. Gox to purchase Bitcoins. It takes the longest but is also the most above the board method. If they can make it easier to do this they will surely gain an advantage over the shady (looking) russian sites offering the same things.

Re: Dwolla Raises $16.5M from Andreessen Horowitz

#35

Post by cookiecaper »

pc86 wrote: post #5
moonboots wrote: post #3

As a developer, the biggest concern I have with Dwolla is the initial friction for new users, e.g. entering their bank account number. I would like to see the complete end user signup flow featured more prominently. I didn't see anything on the topic while signing up for a developer account. Criticism aside, I'm definitely rooting for Dwolla. I don't think they need to match the comparative ease offered with credit c…

I've considered using it to have clients pay me because the only other options are to give away 3% to CC processors, or wait a week+ for a check to come in the mail. If there was a way for me to pass new client onto a single sign-up process (whether I built it via an API or whether it was on Dwolla's page and tracked via referrer), that would go a long way to convincing some of them to use it.

I tried this last summer. It was fairly disastrous. It usually takes 2 weeks to get paid via Dwolla, and if a banking holiday is involved it may take even longer. I had support issues that were not resolved promptly, or in some cases, not at all. If you make a mistake in the UI, your 2 week wait can grow even longer; they've since corrected some of the phrasing, but it used to be unclear if you were putting money into Dwolla or taking it out. If you accidentally put it in when you meant to take it out, you're looking at ANOTHER 2 week wait to get your money, and hopefully the account you ordered a withdrawal on has enough room for that transaction not to overdraft. They won't and supposedly can't reverse that kind of operation.

As a developer, I attempted multiple times to get information on the FiSync APIs, as I have connections to some local financial institutions. I was thoroughly ignored despite some significant persistence.

Like all banking startups, Dwolla is just a frontend for a real bank and they can't control flow or do anything once a "real bank" operation has been handed off. Dwolla therefore sucks. It'd be nice if they used that money to become a bonafide, real banking institution.

My clients and I went back to check via parcel carrier. It was still usually at least a week faster than Dwolla.

Re: Dwolla Raises $16.5M from Andreessen Horowitz

#36

Post by jyu »

dangrossman wrote: post #33
jyu wrote: post #15

Earlier quoted context omitted.

When the entity is defined as a money transmitter, you need to abide by their legal requirements. One of those includes having photocopies of government issued id. They choose to lower the initial barrier to sign up at the expense of a bad one time user experience for getting the money out.

Dwolla does not call itself a money transmitter, and is not licensed as one. Many people feel they're wrong, but to every state that's inquired, they've argued that they're only acting as an agent for the recipient of money, and are not transmitting money themselves.

Wow, good point, faulty assumption on my part.

Here are some further details on their stance:

Dwolla does not receive, hold, or transmit User funds; Dwolla only maintains and manages information associated with User ownership of the funds; (3) Veridian is the entity that provides money transmission services upon instructions issued through the Dwolla software platform; and (4) Funds in the Veridian Holding Account are held in a pooled account.

Veridian, a major investor and bank processor manages the funds. In other words, all funds withdrawn from a user’s bank to be put into their Dwolla Account is placed into the pooled Veridian Holding Account. This legal loophole allows Dwolla to operate outside the state of Iowa, since it is technically never a money transmitter, merely a service provider for a processor, and therefore not subject to the expensive registration and licensing process.

http://sites.tufts.edu/costofcash/2013/03/27/dwolla/

Re: Dwolla Raises $16.5M from Andreessen Horowitz

#37

Post by marknutter »

So I tried Dwolla last week to pay somebody back for some concert tickets and it was not a good experience. I, naively I suppose, thought that maybe Dwolla had come up with some clever new workflow for on-boarding people you wanted to send money to. Alas, I got a few angry texts from the person complaining about having had to input their social security and bank account numbers and, after feeling uncomfortable about having done that, not knowing how to cancel their account. The transaction did eventually go through after I convinced them to be patient, but it's not a rousing endorsement of the platform.

I echo some of the other concerns in this thread that there just may not be an easy way to transfer money to people given all the security concerns. I still far and away would prefer to have my bank send a physical check to somebody I owe money too because at least that doesn't require them divulge sensitive information to an entity they don't know.

Re: Dwolla Raises $16.5M from Andreessen Horowitz

#38

Post by mkoble11 »

shawnee_ wrote: post #12

Mission: Allow anyone [or anything] connected to the internet to move money quickly, safely & at the lowest cost possible. Fantastic mission statement: clear, concise and it sounds almost impossible to do. Although they didn't like my take on it when I was at a certain unmentionable payments company, it was my intuition several months ago that a price war is inevitable in this space. Whatever company initiates it wil…

Fantastic mission statement: clear, concise and it sounds almost impossible to do.

It seems like people really get behind startups with the biggest, craziest visions....it almost serves as a built in rallying cry.

Re: Dwolla Raises $16.5M from Andreessen Horowitz

#39

Post by thinkcomp »

jyu wrote: post #36
dangrossman wrote: post #33

Earlier quoted context omitted.

Dwolla does not call itself a money transmitter, and is not licensed as one. Many people feel they're wrong, but to every state that's inquired, they've argued that they're only acting as an agent for the recipient of money, and are not transmitting money themselves.

Wow, good point, faulty assumption on my part. Here are some further details on their stance: Dwolla does not receive, hold, or transmit User funds; Dwolla only maintains and manages information associated with User ownership of the funds; (3) Veridian is the entity that provides money transmission services upon instructions issued through the Dwolla software platform; and (4) Funds in the Veridian Holding Account ar…

This is nonsense. Although I'm not a lawyer...

Dwolla is a money transmitter according to most (if not all) state statutes. Its relationship with Veridian does not satisfy any statutory requirement necessary for exemption. Veridian itself does not have a charter, and is not a credit union. In my personal opinion, Dwolla has been breaking laws since day one and continues to. Its investors are no different.

Re: Dwolla Raises $16.5M from Andreessen Horowitz

#40

Post by jessedhillon »

marknutter wrote: post #37

So I tried Dwolla last week to pay somebody back for some concert tickets and it was not a good experience. I, naively I suppose, thought that maybe Dwolla had come up with some clever new workflow for on-boarding people you wanted to send money to. Alas, I got a few angry texts from the person complaining about having had to input their social security and bank account numbers and, after feeling uncomfortable about…

Capital One 360, formerly ING Direct, has nailed this on the sending side. The sender needs to know the recipient's email addr and the last four of their bank acct # -- the recipient will receive an email which takes them to a page where they enter the full account # and, if those match, money transferred.
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