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Dwolla Review.
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Dwolla Review.

Started by Bitcoin, Jul 13, 2020, 08:16 am

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Dwolla Review.
Merchant Account Trust Score.
Review Sections.
Dwolla Overview.
Dwolla's Original Business Model.
Dwolla is a Des Moines, Iowa-based startup that was founded in 2008 on the premise of bypassing credit card interchange fees and providing a low-cost payment service to businesses and consumers. Dwolla created a proprietary payment network similar to that of VISA and MasterCard, but Dwolla's network did not charge a fee for each transaction like a traditional merchant account does. Instead, the company eliminated credit card use altogether by linking consumers' Dwolla accounts with their checking accounts. The service may sound similar to PayPal, and in some ways it was, but Dwolla approached the concept from a very different angle.
A Brand-New Cash Transfer Platform.
Although Dwolla's use of ACH transfers was not exactly a new idea, its marketing and business strategy was completely unique. With help from a few banking and financial institution investors, Dwolla created a payment network that eliminated all of the common fees that merchants incur from accepting card payments. Additionally, the company's network eliminated the common transfer delays and fraud that plagues similar networks such as the ACH network that most banks utilize. Essentially, Dwolla created a global system for free, instant cash transfers .
Shift to B2B and Marketplace Platforms.
In the past two years, Dwolla has shifted its marketing to emphasize its mass payout API for marketplace-style and business-to-business payments. In fact, it is no longer offering the customer-facing payment product that competed directly with traditional payment processors. As a result, most consumers and merchants will now only encounter Dwolla as the default payment processing platform integrated into an online product or service. We have continued covering the company because it remains a large player in the digital payments sector, but it is no longer a direct competitor of standard credit card processors.
Dwolla Location and Ownership.
Dwolla is headquartered at 909 Locust St #201, Des Moines, Iowa 50309. Dwolla states that it is "an agent of Veridian Credit Union" and that "all funds associated with your account in our network are held in one or more pooled accounts at Veridian Credit Union." Ben Milne is the CEO of Dwolla.
Dwolla Review Table of Contents.
Costs & Contract: Dwolla offers custom pricing for most accounts but has historically allowed users to transfer payments on its network for free. Complaints & Service: Dwolla has received more than 25 public complaints. BBB Rating: Dwolla has an "A+" rating with the Better Business Bureau and has received 4 complaints and 6 reviews in the last 3 years. Sales & Marketing: Dwolla does not appear to hire independent sales representatives and has received no merchant complaints about its sales practices. Rates & Fees: How Merchants Got The Best Rates With Dwolla Are you a decision maker with Dwolla? Claim this review.

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Products & Services Offered.
Bank transfers Recurring payments API integration Mass payment via CSV upload White label option Custom fees.
Types of Businesses Served.
Retail E-commerce Marketplace platform B2B Personal.
Our unbiased reviews are supported, in part, by helping you find highly rated merchant accounts. You can learn more here.
Dwolla Rates, Fees, and Costs.
Key Points.
Start Plan 0.5% Per Transaction Scale Plan 1.00% - 4.99% Flat Fee Pay-As-You-Go Receive Fee $1 One-Time Pay-As-You-Go Unverified Customer Fee $2 One-Time Pay-As-You-Go Verified Customer Fee $2 One-Time Early Termination Fee None PCI Compliance Fee None Equipment Lease Terms None.
Dwolla's Former Pricing Model.
Prior to its shift in focus, Dwolla probably had the most attractive pricing of any electronic payment service on the market. Before June 2015, Dwolla charged only 25 cents per transaction for any amount over $10. The last time its standard pricing was visible, the company allowed users to send and receive money using its network for free. There were no additional fees whatsoever (including no PCI Compliance fees) and no service agreement or cancellation fees. For merchants who required additional features, Dwolla offered plans that charged a flat monthly fee with no transaction fees. The company's Plus Plan started at $25 per month, its Premium Plan started at $250 per month, and its Custom Plan started at $1,500 per month. Each plan added new features like next-day transfers, priority support, higher transaction limits, and white-label options.
Dwolla's Current Pricing Model.
Today, Dwolla offers 2 pricing plans for enterprise-level businesses and payment platforms. The company's Pay-As-You-Go option with no monthly fee and a fee of 0.5% per transaction with a minimum of $0.05 and a maximum of $5.00. This plan does not come with payment facilitation tools or any customer support beyond forum support. The Scale Plan costs a flat fee determined by the size and scope of a merchant's business on behalf of the company's sales team.
Competitive for Its Target Market.
Overall, the company's previously advertised pricing was extremely competitive, but its current pricing is designed mostly for payment platforms and enterprise-scale businesses. Some standard merchants have complained that the company's new business model has left them behind, but we have not seen any complaints posted by businesses within Dwolla's target market. We will therefore assign the company an "A" in this category.
Are you happy with your Dwolla fees? Tell us about them before your go!
Response from Dwolla.

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Are you a representative of Dwolla? Add your voice to this section for free!
Dwolla Complaints & Customer Reviews.
Key Points.
Total Online Complaints 50+ Live Customer Support No Most Common Complaint Slow Transfers.
Moderate Complaint Total.
Dwolla has more than 50 complaints filed in the usual online forums, including Ripoff Report and the comment section of this review; however, a good number of these complaints appear to describe isolated incidents and simple merchant misunderstandings surrounding the $3.00 monthly fee for Dwolla Instant (an older service that offers up to $500 in instantly transferrable cash). Other, more recent complaints describe technical issues, slow fund transfers, or inadequate support, but they do not indicate a consistent or severe problem with Dwolla's service.
Dwolla Lawsuits.
In 2012, the company faced a lawsuit filed by Bitcoin exchange operate TradeHill. The suit alleged that users were charged tens of thousands of dollars in chargebacks besides advertising a no chargeback policy.
In March of 2016, the Consumer Financial Protection Bureau took action against Dwolla for deceptive practices regarding its data security policies. The company was ordered to pay $100,000 for falsely claiming its data security policies surpassed industry standards through encryption.
Dwolla Customer Support Options.
Dwolla only provides forum support to its "Start" users but extends email support, phone support, a dedicated Slack channel, dedicated customer support, and integration support to clients above the "Start" tier. These additional options are competitive with even the top-rated payment processors for great customer service, but merchants under the Start plan are likely to find that offering inadequate.
Response from Dwolla.
Are you a representative of Dwolla? Add your voice to this section for free!
Promotional Message.
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Dwolla BBB Rating Summary.
Key Points - BBB.
Product & Service Complaints 2 Billing & Collection Complaints 2 Advertising & Sales Complaints 0 Guarantee & Warranty Complaints 1 Delivery Complaints 0.
Note: We have adjusted this company's BBB rating according to our own standards. To better understand why we adjust BBB ratings, please see our Rating Criteria.
Under 5 Complaints.
As of this review, the Better Business Bureau is showing Dwolla as not "BBB Accredited" and is assigning the company an "A+" rating based on 4 complaints filed in the last 36 months . Of the complaints, 2 are due to problems with service and 2 have to do with billing or collection. 1 of these complaints was resolved while the remaining 3 were answered by the company but did not receive a final response from the merchant.
What Merchants Say.
Dwolla has also received 6 negative informal reviews to its BBB profile. The most recent review describes invasive data collection concerns :
Tried to pay my PayJoy account for phone service, DWOLLA asked for my Bank ID and Password to verify the account is mine....Never going to happen. Please, Please, Please DO NOT give your information to this company. The minute you do, all of your personal information is now in their hands. Remember all the stuff you used to sign-up for the bank account, they now have access to it. Had to give one star because ZERO stars is not an option.
Concerns like this are a major challenge facing ACH processors in an industry where customer service scams are rampant.
A "B" Performance.
In light of these figures, we have slightly adjusted the BBB's grade to a "B."
Response from Dwolla.
Are you a representative of Dwolla? Add your voice to this section for free!
Truth In Marketing & Advertising.
Key Points.
Employs Independent Resellers No Advertises Deceptive Rates No Discloses All Important Terms No.
In-House Sales Team.
Dwolla primarily markets itself via its website and uses no deceptive advertising or marketing tactics that are apparent to this reviewer. There are also no complaints regarding the company's sales tactics to be found on this or other consumer protection websites, which indicates that there are no issues with hidden fees or rate increases. Dwolla has replaced its flat and free pricing options with a custom rate quote now that it focuses on platform-scale payments, but we have not found complaints about these custom pricing plans.
Solid Track Record.
Given Dwolla's history of transparency and the lack of sales-related complaints, we have assigned it an "A" rating in this category. If you suspect, however, that the company has misled you about its pricing, you can get a professional analysis with a third-party statement audit.
Response from Dwolla.
Are you a representative of Dwolla? Add your voice to this section for free!
Promotional Message.
The ad above is served by Google Adsense and may display ads for poorly rated providers. Research is recommended after visiting an advertiser.
Our Opinion of Dwolla.
A Solid Option for a Very Specific Type of Business.
Dwolla is an established alternative payment processor in the credit card processing industry. The company offers an API-integrated ACH payment alternative for merchants. Dwolla is best used as a supplement to a traditional credit card processing service. The service is especially useful for business-to-business payments, mass payouts, and rent payments . Enterprise-level merchants should be sure to compare Dwolla's payment options to those offered by the top enterprise-level merchant account providers.
We rely on your feedback about Dwolla to keep this review accurate and up-to-date. Please take a minute to tell us about your experience. We and the small business owners of this world thank you!
Top Rated Merchant Accounts of 2020.

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About Phillip Parker.
Thank you for reading my review. I hope that it has helped you with your research.
Why I'm Qualified to Write About Credit Card Processing and Merchant Account Services.
I'm a former credit card processing sales director who left the industry because I didn't like how it takes advantage of small business owners. It feeds like a leech on businesses and thrives by imposing fees that are nearly impossible to comprehend. Seeing a need for change, I left and built this website help business owners better understand the industry, research merchant services providers, and get refunds of excessive merchant account fees. My experience of working "behind the curtain" in the industry, and using that knowledge for good, has resulted in millions of dollars returned to hard-working small business owners as well as enterprise-level companies.
From the time that I starting working in the merchant services industry to when I left to create this website, I've been on the pulse of payments for nearly 15 years. It didn't seem fair to keep this "insider" knowledge to myself. To lift the fog, I've reviewed hundreds of companies, read thousands of user reviews, and learned the pricing tricks of every provider. If you have questions about credit card processing, you can find the answers on this website.
How I Can Help You.
Submit a Statement.
33 Reviews Leave Your Review for Dwolla Below.
Worst service ever. It's been 4 days and the payment is still pending. I'm assuming the transfer to my bank will be equally as long. I am removing this payment option from my website. I will never use this again. It's awful. I would rather pay a fee to be paid quickly. This has delayed me from starting a job by two weeks because the customer deposit is still in pending status. It would have cost me less to pay a fee to PayPal for an instant payment than to delay a job and lose money.
Dwolla has removed all their pricing tiers to focus more on enterprise-level. The only pricing they have available is $2000 per month which is ridiculous for startups. Unfortunate what this service has become.
With zero notice, and in the middle of our busy season, they apparently stopped supporting our platform. So our customers can no longer use Dwolla. We only found this out when someone tried. Their A rating should be removed ASAP.
Dwolla charged 3 NSF fees to my bank even after my rent payment was posted successfully. If you call customer service no one is there to answer and the customer service voice box is always full. Do not use this service / payment method unless you want to get ripped off !
Worst processing payment- takes at least a week to process your payment. No efficient at all.
Absolutely horrible experience. Singed up thru godaddy bookkeeping. I had business accounting thru them.
Couldn't receive payments and the customer would get nothing but "an error occurred."
Finally got to talk to them, they said i had to upgrade my account.
Many tries later, cancelled my account.
A horrible experience. Feels like a 14 year old in a basement decided to make a website with the cool new framework.
I'm beyond unhappy with Dwolla, I have been waiting for payment since the first when all my bills are due. It says online that my money is available but I can't withdraw it because my bank account isn't verified. Well I have deposits In my bank account from Dwolla in my bank account, but when I emailed them saying I cannot verify my bank account they said my information is wrong, but I looked and it's accurate. I have been waiting way too long for this money without a sufficient answer from Dwolla. So my review is to never use this service on account of how shitty they're process is! I'm beyond unhappy and a few of my bills are now late because of them. I already have your "verified numbers" in my account, give me my money.
I agree. It is absolutely junk. We have an established business with perfect relations with our merchant accounts and we have two merchant accounts and both are spotless. We are a multi million dollar company. We tried to diversity and offer what they promise on dwolla a cheap fees. So we went thru tons of personal and financial documents we submitted to Dwolla and they approved our account and our bank and verified us and so forth. Then we hired a programmer and did the API integration which sosted us a lot and time. Dwolla tested it and confirmed it is good and we went live. Luckily we convinced only one recurrent customer to use Dwolla. Dwolla promise immediate fund, easy signup, customer will have no hastle and so forth. That was a lie. Our customer is a well established business with excellent merchant account and is a large business. The customer went thru headache of faxing documents to Dwolla over two weeks. Finally the customer was approved and over 10 days made 7 transactions. Dwolla emailed us complete and transaction authorizations and we shipped the products. We never got the fund. We called Dwolla and they confirmed seeing the transactions but an issue with the API. Dwolla tested the API and all was good. Dwolla asked that we tell the customer to send payments using our email until they look into the API. The customer did use our email and sent from their Dwolla account directly payments. Finally we saw the payments under our Dwolla account but states takes 3 to 4 days to process the fund. Then we emailed Dwolla about our API what is going on. Dwolla emailed they need our Bank statement and faxed more documents. Strange and we did it again right away and even sent them the bank statement with the Dwolla verification deposits. Finally Dwolla emailed us stating the transactions cancelled. We phoned them and spoke with the so-called supervisor and asked what is this issue. The supervisor said since we have other merchant account, we did not lose anything just get paid by the other merchants. They are junk. They costed us time, money in programming cost, stole all our financial data and our one customer data and who knows what they do with them. We are closing our bank accounts because of this Dwolla shady problem. Luckily, our one customer is a recurrent customer and we are able to get the money from them. But if we went live and had so many customers that used them and we got their authorization and shipped the products, our losses would have been huge. The worst company we even dealt with. Our customer also agreed as had over two weeks of faxing documents and headache never encountered before.

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Warning: Do not sign up for Dwolla. They want me to send all my personal information like bank statements, driver's license number, etc. Sounds like a scam! Customer service is rude and not helpful.
Yes. I WOULD.NEVER RECOMMEND DWOLLA TO ANYONE FOR ANYTHING! I just had this same issue... set up an account. Did a couple Dwolla to Bank transfers... Then they withhold my transfer, later asked me to verify my bank account by sending bank statements, after asking for a copy of state ID day before... and then later why I get money from the sender. I comply then they close my account. Customer service was very unhelpful. Said our securities department has to process and approve... got several conflicting emails talked to several customer service people etc... experience was awful and they have delayed payment and my personal information that I provided is not retrievable and probably not protected. This is fraud.
I would NOT recommend this service. I opened an account and immediately had a stranger access my account information by transferring money and emailing me. There is no way to contact the company other than by email. It took weeks just to receive an email that their security team will 'No longer be able to service my account'. NO response as to what this means so far. Also, no customers want to go through the personal bank account information required to setup an account since this is such a new service.

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Dwolla stops working with Bitcoin companies and exchanges.
Online payment system provider Dwolla has announced that it would shut its doors to internet currency exchanges and other bitcoin-related services.
CoinDesk reports that the company sent emails to its customers running companies concerned with bitcoin and other digital currencies and communicated to them that it was retreating its services as of October 28 at 16:00 CT.
Reasons behind the firm's decision are not included in the email.
The email states, "Recent interest involving virtual currency and its exchanges has created uncertainty and confusion around virtual currency, and Dwolla's relationship with a small number of its exchanges. This has forced Dwolla to reassign resources, funds, and services."
It goes on to say, "As Dwolla gears up for a new stage of growth, we recognize that we can no longer sustain this merchant base (0.1 percent of Dwolla merchants) and its unique needs, and that attempting to do so jeopardizes both of our communities' starkly different, but similarly ambitious, vision for improving payments."
Before discontinuing them entirely, Dwolla will gradually be winding down the services for its digital currency customers over the two-and-a-half weeks. For example, from today, only present Dwolla users can send money to bitcoin companies, while on October 15, those bitcoin companies can no longer receive funds through Dwolla and can send it only on October 15 - until October 28, the day when these corporate accounts will be terminated.
On Reddit, members have contradictory opinions on the new development. User "trifith" stated that it was "going to happen sooner or later."
trifith added, "The point of exchange between Fiat and BTC is the single weakest point in the bitcoin ecosystem. We shall see what comes of this."
Another user named "ths1977" said, "No doubt it's the government trying to cut off U.S. dollar to Bitcoin, there is no other way for them to stop it."
This move by Dwolla comes immediately following Capital One suspending a company's (Mulligan Mint's) bank account after the company began selling strictly commemorative copper and silver bitcoin coins. Rob Gray, the CEO of Mulligan Mint, said that the bank had not bothered to conduct its study properly, as merchant services said the account was closed because the company was selling bitcoin.

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Dwolla bitcoin.
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UPDATED 22:30 EDT / MARCH 06 2012.
Dwolla Caught in Legal Feud with Bitcoin Exchange TradeHill for $2 Million.
In what has all the hallmarks of a legal fiasco, Bitcoin exchange TradeHill has filed suit against payment network startup Dwolla and alleged racketeering, intentional misrepresentation, false advertising, and breach of contract, among other violations. TradeHill is claiming that Dwolla has cost them at lest $2 million in damages.
Adrianne Jeffries of Betabeat has the best coverage of this lawsuit and the history of the ongoing court proceedings. A history that includes the suspension of Bitcoin trading by TradeHill mid-February with refunds after chargebacks removed over $100,000 from their accounts.
"We've been trying to resolve this for eight, nine months and they ignored all communication," Pierre G. Basmaji, the Santa Monica-based attorney for TradeHill, told Betabeat by phone. "I have no idea why. I think... they don't know how to handle it and were just hoping we would go away."
Today's posturing continues with a press release published by Dwolla stating that they had not yet been served with legal papers regarding the lawsuit in question. TradeHill shortly fired back with their own press release on their blog, stating that they indeed "filed a complaint for damages in the United States District Court for the Northern District of California against Dwolla and two of its officers."
The release mentions that the complaint will show that Dwolla fraudulently reversed nearly $100,000 in credited transactions after TradeHill attempted to withdraw funds from their account. They are also citing further damages relating to that initial loss of money including the loss of the "bitcoin.com" domain.
The complaint on file (as of March 5) cites defendants as Dwolla, Inc., CEO Ben Milne, COO Charise Flynn, and five unnamed individuals (or Does.)
While it's obvious from the Bitcoin community that indeed Dwolla suddenly became chargeback happy--and did so in a manner that caused surprise and harm to exchanges--the biggest exchange in themarketMt.Gox still uses them as a payment network. Initially, Mt. Gox cofounder Mark Karpeles says that the chargebacks simply "disappeared" from the history; but later Mt.Gox and Dwolla managed better communication about charges and chargebacks.
Karpeles cites a figure of $5,000 lost in the initial salvo (the same one that caused TradeHill to be plowed under.)
No doubt there's a great deal of bad blood between Dwolla and TradeHill--especially judging by the addition of "defamation" in the allegations of the lawsuit.
The court proceedings will be watched by many in the community.
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Dwolla scores first big-bank partner for real-time payments.
Customers of BBVA Compass can send and receive money instantly using Dwolla. Goodbye to two-day delays and high fees.
The payment network Dwolla has inked "the most important partnership we've had to date."
That's how founder and CEO Ben Milne describes his company's new deal with BBVA Compass, a subsidiary of BBVA Group. While the parent company is headquartered in Spain, BBVA Compass is based in Birmingham, Al., and is one of the 25 biggest commercial banks in the U.S. by deposit market share. Beginning on Wednesday, BBVA Compass customers can send and receive money instantly over Dwolla's payment network. (The feature uses FiSync, which is Dwolla's secure payments protocol specific to financial institutions.)
The idea of real-time payments is exactly what it sounds like: money sent from one party to another is accessible to the recipient instantly, as though it was handed off in person, without the standard three- or four-day processing delay of the Automated Clearing House, and without the usual fees. (Dwolla charges no fee for transactions below $10, and 25 cents if it's above that.) The new partnership makes BBVA Compass the largest financial institution to use Dwolla.
Dwolla launched in 2010, but it has taken many years to roll out some of its products due to regulatory headaches, Milne says. The company is headquartered in Des Moines, Iowa, with 20 of its 75 employees based in Silicon Valley.
BBVA Compass, meanwhile, is the result of a series of acquisitions by BBVA, including Laredo National Bank, Texas State Bank, State National Bank, and the $9.1 billion acquisition of Compass Bancshares in 2007. It is Spain's second-largest bank, and its U.S. operations are largest in Texas, where it has 341 of its 672 branches and 58% of its U.S. deposits. BBVA's digital ambitions are no mere talk: in 2011 it opened BBVA Ventures, a tech center in Silicon Valley, and in 2013 pledged to invest $100 million in fintech startups. It has aggressively ramped up tech partnerships and investments (like its 2012 investment in Ribbit Capital) and made acquisitions, like purchasing the banking startup Simple for $117 million last year. In 2014, BBVA Compass had $2.9 billion in revenue.
For Dwolla, this collaboration is big news, and the first sign that traditional banking giants could partner up and adopt its platform, rather than seek to duplicate it on their own. For BBVA Compass, it's a way to offer its clients a new service, but also get good optics and look like a nimble innovator among peers that are often docked for being big and slow.
"Companies in Silicon Valley have been coming to us for three years saying, 'We understand Dwolla, we understand real-time, we want access to FiSync, how can we get it,'" says Milne. "Now we can finally say, 'It's ready. Go to BBVA Compass, they've got it.' I also think this will create a standard that other people can look at, including even the Fed, which is trying to create a real-time infrastructure in the next five to 10 years."
The partnership with Dwolla came out of an initial connection made, unsurprisingly, at the South By Southwest festival two years ago. And it has involved everyone from BBVA Compass's chief executive to its BBVA Ventures team in San Francisco. "We feel like in order to be successful as a bank, we need to be a successful digital bank," says Chad Ballard, the bank's director of mobility and new business technology. "We are trying to be digital-first in everything we do. We've gone through a major overhaul of our digital technologies, and when you look at the technology expansion in banking, and where BBVA is in that transformation, I think we're a leader, ahead of a lot of the big financial institutions."
Dwolla has peers and competitors in established payment networks like Square, as well as in digital currency startups. One of the main appeals of bitcoin, for example, is that it can be sent between two parties instantly, securely, anonymously, and with negligible fees. "Over time," Milne says, "we see Dwolla as a network belonging right besides Visa and Mastercard, and things like Square and PayPal and Google Checkout. Visa and Mastercard already offer the luxury of speed, but you suffer the cost. Now you can have the speed, without the cost of the infrastructure." As for cryptocurrencies like bitcoin, he predicts that eventually, payment networks won't distinguish between them: "The way we perceive all virtual currency is that by its nature, it is now simply currency. But our focus should remain on the largest underserved market in the world for real-time, and that's the U.S. dollar."
Does this partnership solve any urgent need for most banking customers? The average consumer likely isn't complaining much about the delay in sending funds. But Milne cites a wide range of use cases, from a company needing to pay all of its contractors at once, to a tenant sending the rent check and not eager or able to have to send the money a few days in advance, to a parent sending emergency money to a child in another state. He uses what he calls the "grandma scenario." Milne says that if he were explaining real-time payments to his grandmother, he would say, "This is probably not relevant to you right now, but when something pops up and you need me to send you $1,000 right away, I can, and it won't take three days."
If you are not a BBVA customer, you can still use Dwolla to send payments, but you would need to deposit money directly into a Dwolla account, as opposed to the process being seamless for customers of BBVA or Dwolla's other future banking partners.
Milne also has hopes that developers will continue to build on top of Dwolla's open network to create point-of-sale applications, which will raise acceptance by merchants. "Over time," he says, "I think we'll see developers building applications that allow you to pay with things like Dwolla, or bitcoin, or anything else, at locations that want to get paid in whatever way the customer wants to pay."
BBVA is hoping this partnership will make it a leader for other banks to follow. "I think bringing real-time payments to the U.S. is a badly needed thing," says BBVA Compass chairman and CEO Manolo Sanchez. "So who are the players that could develop this? Some players could have done this and it hasn't happened. Banks have been a bit of a laggard. Our bank wants to be a partner to disruptors that can use our rails and our infrastructure. If you want to take advantage of the disruption that's happening in financial services by nontraditional bank companies, you have to be willing to work with them."
The payment network Dwolla has inked "the most important partnership we've had to date."
That's how founder and CEO Ben Milne describes his company's new deal with BBVA Compass, a subsidiary of BBVA Group. While the parent company is [...]

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Dwolla sued by former Bitcoin exchange, issues statement.
A rocky relationship that we wrote about July has reemerged today with news that TradeHill, a former online Bitcoin exchange based in San Francisco and Chile, on Monday filed a federal lawsuit against Dwolla, an online cash transfer startup based in Des Moines. The lawsuit lists nine complaints, including false advertising, breach of contract and.
A rocky relationship that we wrote about in July has reemerged today with news that TradeHill, a former online Bitcoin exchange based in San Francisco and Chile, on Monday filed a federal lawsuit against Dwolla, an online cash transfer startup based in Des Moines. The lawsuit lists nine complaints, including false advertising, breach of contract and defamation, and seeks, according to Betabeat's interview with TradeHill's attorney, at least $2 million in damages. The lawsuit names Dwolla, its CEO Ben Milne and COO Charise Flynn and five other undetermined defendants.
The story was broke by Betabeat around noon, and was followed by a story from the Des Moines Register, a press release from TradeHill and around 5 p.m. a statement from Dwolla. Leading up to today's news was the following series of events over a nine-month period:
June 8 - TradeHill began accepting Dwolla to allow users to transfer funds in and out of its online Bitcoin exchange. Bitcoin is a peer-to-peer currency that's not backed by any centralized authority. Bitcoin exchanges allow individuals to buy Bitcoins from one another. July 26 - TradeHill announced it no longer accepts Dwolla because of an issue it experienced with chargebacks. It alleged that after it credited a certain number of user accounts with Bitcoins, Dwolla reversed those users' payments to TradeHill, leaving TradeHill with lost revenue as it had already sent its users the purchased Bitcoins. In a blog post, TradeHill's CEO published an open letter to Milne asking for cooperation in the matter. February 13 - TradeHill shut down its Bitcoin exchange citing "increasing regulation" in a blog post. It also said that one of its "payment processors removed over $100,000 dollars" from its account without notice and that it would take legal action against the processor. March 5 - TradeHill files a federal lawsuit ( embedded below ) against Dwolla, two Dwolla executives and five other undetermined defendants.
In a phone interview today, Dwolla director of communications Jordan Lampe declined to comment but issued a statement from the company via email ( below ), which states that Dwolla has not yet been formally notified of the lawsuit.
For more on TradeHill's lawsuit against Dwolla, which Betabeat reported to be the statup's first, see the embedded lawsuit and Dwolla's statement below as well as stories from Betabeat and the Register. As details emerge, we'll update this post as needed or provide further coverage.
TradeHill's lawsuit filed against Dwolla.
Dwolla's statement on TradeHill.
First and foremost, it is important to note that neither Dwolla, nor any of its management or investors, have been served formal notice of any potential lawsuits. It is also noteworthy that a party making unfounded allegations would likely notify the media of litigation prior to advising the party that it says caused it harm. That said, if served, we will vigorously defend all allegations of wrongdoing in the traditional venues of the judicial system. What we will not do is provide specific comment on specious allegations made by those who have a self-serving interest in seeking publicity.
In the interests of transparency, we'd like to say a few high-level things: Dwolla has always worked closely with merchants to rightfully identify and protect the victims of identity theft. Every day, thousands of users log thousands of successful and legal transactions in one of the industry's safest ecosystems. Unfortunately, as is a reality with all financial services (e.g. banks, credit cards, etc.), predators can use stolen identities to create fraudulent accounts without a victim's knowledge. That's why Dwolla requires numerous identification and verification steps.
A necessary byproduct of this kind of fraud is bank-level reversals, "chargebacks" issued by the institutions on behalf of the victim, not Dwolla. With that said, we will not play accomplice to sources of ongoing fraud. In such cases, we move quickly and act appropriately to facilitate restitution on behalf of the financial institution and its members (the victims). This is required by federal and state consumer protection laws, but more importantly it's the right thing to do.
Most all merchants are well aware of the problem, which is why we've always had something in our terms of service about chargebacks since Day One. Notably, there are certain types of businesses and marketplaces that are continued targets for illegal activity and, just like we work hard to protect and improve our community, a similar expectation should be assumed on behalf of merchants participating in high-risk industries. If any merchant continues to be a source of systemic fraud and we cannot come to an agreement, we will always take the appropriate actions.
In the event that a user or merchant feels as though they have been wronged to the point of litigation, we'll be happy address their concerns or issues in the court of law. It is their right to do so, as it is our right to rationally and reasonably present our side. So while people may throw a bit of mud on us, it's important to let the appropriate parties figure this stuff out. This will allow us to focus on what we do best: Build.
In the meantime, Dwolla continues to be a source for hundreds of thousands of transactions, all safe, legal, and cost-effective. Please, don't hesitate to drop us a line.
Credits: Copy of TradeHill's lawsuit embedded from Adrianne Jeffries on Scribd.

Bitcoin

As Bitcoin exchanges drop Dwolla, Milne says company stays focused.
As of Tuesday, Bitcoin exchange platform TradeHill is no longer accepting Dwolla, citing the occurrence of chargebacks as the reason for its decision. Since TradeHill's launch in early June, it had been accepting Dwolla as a way for its users to fund their accounts in order to purchase Bitcoins, a virtual, peer-to-peer currency, on its.
As of Tuesday, Bitcoin exchange platform TradeHill is no longer accepting Dwolla, citing the occurrence of chargebacks as the reason for its decision.
Since TradeHill's launch in early June, it had been accepting Dwolla as a way for its users to fund their accounts in order to purchase Bitcoins, a virtual, peer-to-peer currency, on its exchange. According to the blog Bitcoin Money, Bitcoin exchanges, such as TradeHill, have chosen to use Dwolla for its competitive transaction fee (a flat 25 cents) and the understanding, which has now proven inaccurate, that Dwolla transfers are non-reversible.
This news concerning TradeHill, one of the top two Bitcoin exchanges -- Mt. Gox is the other -- comes less than one week after Dwolla reached its $1 million in transactions per day milestone, a portion of which can be credited to Dwolla's use in the Bitcoin market. "Given Bitcoin's recent explosion," The Next Web's Brad McCarty wrote on Thursday, "it would stand to reason that at least part of Dwolla's explosive growth is being caused by the ease of compatibility between it and the Bitcoin currency system."
According to a TradeHill blog post on Tuesday, TradeHill was one Dwolla's top two customers (Dwolla declined to comment on this fact), but now it is no longer.
"We have witnessed nine cases where a Dwolla payment we received (and credited) was reversed days or even weeks later," TradeHill wrote on Tuesday. In a post on Monday, TradeHill said a recent audit of transactions found losses of $37,000 due to reversals by Dwolla, meaning that TradeHill had administered Bitcoins to users after receiving a credit confirmation but then later learned that the Dwolla transaction had been reversed.
Regarding Dwolla's ability to reverse a transaction if a customer dispute is submitted, Dwolla CEO Ben Milne said: "At the end of the day, these processes have been in practice with these merchants -- and (by) these merchants, I mean Dwolla merchants as a whole -- for quite some time.
"And I think that the unfortunate side is that you know there's an air of uncertainty about Bitcoins as a whole, and I don't think this is probably any exception to that rule," Milne said. "But in this case we require written consent for a reason when [selling] certain goods, and we do retain the right and we always have retained the right to be able to arbitrate these types of disputes and be able to relay those disputes through financial institutions."
More than once, Milne stressed that Dwolla is committed to supporting "legitimate users, purchasing legitimate goods and services that they legitimately want." If a user has a dispute or issue with Dwolla, Milne said his support team can be reached by phone or email, the latter of which never goes unanswered.
Whether TradeHill's decision will lead to a domino effect amongst the Bitcoin trading platforms is yet to be seen. As of today, a second exchange, ExchangeBitcoins.com, has also stopped accepting Dwolla.
When asked what this means for the future of Dwolla, Milne said: "Moving forward, we have to continue to concentrate on our core clients, and we will." Those core clients include Dwolla's banking partners, such as recent FiSync sign up Financial Plus Credit Union, and a future 15 more banks that plan to offer FiSync.