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Comment by singingwolfboy | Hacker News Reader

So what? Why would I use Dwolla instead of a credit card?

Because the merchant in question may not accept credit cards. For example, if I do contract work and invoice you for $8,000 I except the full amount. So if you were to pay with credit card it would cost you an extra 2.9%/$232 to pay me.

The sweet spot is probably rent payments and the answer is "Because your landlord won't take a rent payment on a CC most of the time because their profit margins are only a little more than the CC fee."

I can't imagine my landlord doesn't make more than 3% on my apartment every month...

Well, we can speculate on the reasons, but I've rented maybe a dozen apartments, some from individuals and some from management companies, and none of them has ever offered to take credit cards.

I would certainly hope so! But why should your landlord shave off 3% of his ENTIRE revenue stream? I mean, that percent is almost Wal-Marts entire profit margin.

If he is processing 200 payments of $1000/mo, that's $6000/mo in fees that he loses, or the equivalent of six entire rents! Dwolla, on the other hand, would cost him $50, or a 20X reduction in costs.

I accept payment electronically via Intuit Payment Network.

It costs me $0.50 per transaction for bank payments, or 3.25% if I choose to allow credit card payments.

No subscription charges, no setup fees, nothing.

And Dwolla would still cost HALF of what you pay.

if google stopped providing free lunch, that's 20k employees times 250 lunches at $5/meal, or $25M. Give them a diet coke @ $0.20 instead for a 25x reduction in costs!!! that's more money saved than dwolla's entire busness!

lets not deliberately de-normalize our figures, yeah?

I'm not deliberately de-normalizing figures. What?

What I did is a fair comparison and one of the main reasons Dwolla is already very popular for paying rent and for paying wages.

How can you chastise me for improper comparison when I used their most basic use-case, the one they're actively working on, and you bring up a completely unrelated benefit an employer provides for their employees.

Google can spend what they want, but that doesn't change the fact that $0.25/transaction is crazy for a businessman used to paying 3% of his business!!

I can't think of any reason a consumer would benefit from this over a credit or debit card. Except maybe if they regularly overdraft and prefer a $5 fee to whatever their bank charges.

What about the ones they list? Merchants having to pay a lot to process your money makes things more expensive. That affects you.

But for it to turn into a direct benefit for you, merchants would have to give you a discount for using Dwolla.

Does that/can that happen?

That can't happen, since credit card companies won't allow this.

However, some merchants could accept _only_ dwolla, which could change the game.

Don't discount the possibility that this might be fixed with legislation.

CC would be against this but isn't the target merchant the one that does not already take CCs? Street merchant, plumber, kid that shovels my driveway, or wheeled merchant.

That's exactly my point. In order for me to want to use Dwolla (and pay the $3 set up) I would have to believe that enough merchants out there will let me pay with Dwolla that I would get some unique benefit for using it.

Dwolla is awesome for merchants and neutral for consumers.

I give my customers rewards points for using Dwolla which they don't get when paying with other methods. I'm more of a small business and have to micromanage this all though. (I didn't know this is supposedly against CC terms too haha)

I don't see why my average (online) customer is going to pay $3/mo for this, but then I am probably the only place they are using Dwolla. Also, I am very hands on with them and just take "their word" or fill an order when I get the notice that the 2-3 day travel of funds from their bank to Dwolla is good.

Again, I think this Instant thing all ties back to the CU Exchange feature I discussed before. Dwolla tries to forge a sort of deal where this bank's customers get Instant without the $3/mo fee and Dwolla + the bank chop the other half of money made in "transit time interest".

Long term, I see the success of Instant tied to this, banks being able to offer free Instant as a perk with an account with them, versus Instant used as a cheaper overdraft or standalone feature.

this is exactly the point, unless merchants actually display the discount you receive vs using a credit card then it doesn't matter. More than likely merchants will swallow the profits, and consumers won't see the benefit. I earn quite a bit from rewards points as well, the difference in monetary savings vs credit cards would have to be proportional.

It's targeted more for situations where credit/debit cards are not currently accepted. For example, large transactions for professional services. Think of it more as replacing checks, not cards.

That is one of the goals but the other goal is reducing the cost for the merchant. Merchants will prefer you to pay with Dwolla as opposed to a credit card because they don't give up as big of a fee on each transaction, this earning them more revenue.

Maybe. But 2-3% is about the right price for a financial txn between strangers, especially when not face-to-face.

Why? Why should there be a percentage-based fee at all for financial transactions? This is an idea that credit card companies have pushed onto the world, but there's no reason it needs to be accepted as fact.

I didn't really mean all. I did say between strangers and especially when the two are not face-to-face. Two other qualifiers: 1) when "good funds" need to be transferred immediately and 2) for dollar ranges from around $10 to $1,000. This makes up the vast majority of retail commerce for which credit cards are so well suited and widely used.

Best approach is to look for areas where credit cards are not widely used instead of trying to displace them in areas where they work really (really, really) well.

I've been wondering why I would use this and I think this comment hits the nail on the head.

But why would want to pay $3? Big payments are usually pretty well-timed and don't need to be "instant."

Hmmm, not sure where Dwolla is going with this, it seems to make more sense to laser focus on those who would find the most use for their product (big ticket buyers and sellers, not people buying a t-shirt on a whim).

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