Dwolla launches Dwolla Credit – Real-time payments without interchange
blog.dwolla.com
blog.dwolla.com
> Prior to applying for a Dwolla Credit Account, Comenity Capital Bank requests your consent to provide you important information electronically.
The APR stated in my "prescreened" offer was 24.99%, which is staggering compared to my existing revolving credit accounts. There must be some subtle feature that makes this product novel, but I don't know what it is.
As far as I can tell, it's more similar to BillMeLater than it is to a credit card. The only other information I could find on Dwolla Credit is a support FAQ[1]. Interestingly, the credit provider is Comenity Capital Bank, which is also behind BillMeLater[2].
I still don't completely understand the difference in models between something like Dwolla Credit (or BillMeLater) and a credit card. Why do credit cards cost the merchant 2+%, while Dwolla Credit only costs 25 cents? It seems like the same risks apply.
[1] http://help.dwolla.com/customer/portal/articles/1330333-cred...
To be fair, there are a number of fraud detection algorithms at play as well, but those algorithms often have wholes in them or come into play only after the fraud has occurred.
As an online service, Dwolla requires users to authenticate directly with them, where they can take steps to mitigate fraud by requiring two-factor authentication, etc. Authentication with merchants is handled via a token-based method. In addition, fraud detection may also be substantially easier because Dwolla is privacy to additional information about its users (IP address, purchase details, cookie tracking, etc.) that may not be available to traditional credit card providers. Dwolla may also be privy to additional information that allows them to assess the credit-worthiness of their customers and minimize the danger of default.
This probably doesn't totally explain how Dwolla dropped the cost of fraud detection down to a flat 25 cents (e.g. it doesn't explain why PayPal charges a percentage-based fee), but I bet it's part of the story.
http://www.bloomberg.com/news/2013-10-22/ebay-probed-by-regu...
EBay Inc. (EBAY) is facing a probe by the Consumer Financial Protection Bureau over a loan program that mimics a structure used by high-interest lenders to evade state rules before the practice was stamped out by regulators. The program, called Bill Me Later, is a service of the online marketplace’s PayPal unit that relies on Salt Lake City, Utah-based Comenity Capital Bank to make loans that are then purchased and managed by EBay, according to regulatory filings. Under federal law, banks can lend in any state without being licensed there, or complying with local interest rate caps.
<and> In 2008 EBay acquired Bill Me Later, which also lets users finance purchases in online markets run by Wal-Mart Stores Inc. (WMT), The Walt Disney Co. (DIS) and Apple Inc. (AAPL) Customers can avoid the annual 19.99 percent rate by paying off the loan before the end of a six-month promotional period. If they pay later, they incur accumulated interest and fees that effectively raise the annual rate.
Signed, A New Zealander.
Signed, A Singaporean!
Currently the "proof of work" kills two birds with one stone: it allows transfer of the currency and also mines new coins for the exchanges doing the transfer. But that only lasts until the 21 million cap is reached; after that, no mining, no free money for exchanges, but since someone still has to do the work ... it'll be for a fee.
It's also not a cap, it's a target. "Reaching" the target means either:
1) all of our speculative bitcoin money becomes worthless as miners stop mining because it ceases to be profitable, so new blocks are not produced, so transactions don't flow.
2) miners stop processing transactions below a certain size or without a certain fee included, so only poor peoples' money becomes worthless as they can't afford the fees, don't meet the size limit, etc. or
3) the algorithm works, all of the money is fungible, and fees that are a fraction of what you and I would consider money today are enough for miners to make a living, as long as they are contributing a fraction of a percent of the hashes that sustain the whole network globally.
There's nothing "Free" about the miner fees. The subsidy of block rewards are meant to compensate early adopters for their hardware and electricity costs. If miners don't horde bitcoins to themselves, they don't "need" the money to be viable, once their investment is paid off they can just as well unplug the machines and let them sit on a shelf, assuming it's not worth their time and electricity to go on mining.
Bitcoin is "free to transfer" at exchanges because exchanges collect their fees through other vectors than transfer... eg, trade fees, merchant fees, venture capitalist infusion, ... there's no free money, and if you think there is, ask anyone who's already become rich on bitcoin how many they're keeping "in case the value goes sky high" eg. so others can make money off of us all.
Isn't it illegal to charge the customer before the goods are shipped. Do they handle pre-auth and settlement?
You can read about them here: http://help.dwolla.com/customer/portal/articles/1203299-how-...
and here: http://help.dwolla.com/customer/portal/articles/87923-file-a...
You don't prepay?