I came across an announcement regarding a new peer-to-peerpayment service called Dwolla (https://www.dwolla.com) and whatcaught my eye was the description of how the service came about.Twoyears ago the founder, Ben Milne, owned an audio equipmentbusiness.One assumes this came with high ticket items and highinterchange fees.Ben thought he could do better and put togetherabout $1.3M in funding to launch Dwolla offering the service tomerchants at a flat $0.25 per transaction.
Users pay nothing to transfer money and Ben setup a relationshipwith The Members Group and Veridian Credit Union to offer federallyinsured deposits and low cost processing.The service is beingmarketed to local companies, non-profits, and individuals withplug-in apps for iPhone and Android phones.
This type of entrepreneurship reminds me of how the dot.comindustry was developed twenty years ago and which ultimatelyrevolutionized the way we live, work, and play.Plenty of companiesdidn’t survive the dot.com bust and this will be true for paymentsorganizations as well.But looking at how Dwolla put their businesstogether, which was a combination of venture capital, angelinvestors, and a government grant in conjunction with a localfinancial institution and service vendor, underscores howtraditional and non-traditional services can meet in the middle tocreate value.One merchant quoted in the article stated he waspassing his savings back to his consumers – now, how aboutthat?!