Dwolla: Financial Trojan Horse

Since nobody reads my blog, aside from the 140 that read my cover letter yesterday (humble brag), I thought I’d pen something on Dwolla. Why Dwolla? Because their wonderfully kind CEO tweeted back at me last night. Don’t know what Dwolla is, Ashton Kutcher invested in it. I’m sure that’s all you needed to know so I’ll continue assuming you’ve stopped reading.

Dwolla is a Trojan horse; at least I hope it is. Dwolla helps people/businesses exchange “cash” digitally for very low fees: $0 for transactions below $10, and $.25 for transactions over. Dwolla also provides a FREE (and what seems to be technologically awesome) alternative to the Automated Clearing House, or ACH, a 50+ year old protocol for exchanging money between financial institutions. The ACH is the reason you must wait 3–5 days for bank account transactions to clear. So Dwolla does 2 things, cuts out credit processors that take a 3%ish cut from merchants AND provides technology to banks that makes the transfer of funds immediate.

The next questions are what does a transaction with the front and back handled by Dwolla look like and why does a company that makes $.25 a transaction merit millions in venture capital? Well the first question is pretty simple to answer: fast. Moreover, brick and mortar financial institutions are no longer essential to “cash transactions”, you cannot overdraft because Dwolla know if your funds are insufficient, and credit card companies won’t be gouging us with unbelievably high interest rates. As for deserving venture capital, I cannot speak to the number of financial transactions over $10 made everyday but it’s easily in the tens of millions.

Digressing briefly I should address the topic of Trojan horse. FiSync is an awesome technology, and it’s FREE. It’s free because it makes Dwolla’s front end that much more practical for consumers by eliminating friction. It also makes the service more attractive to merchants if their bank has FiSync technology. Is Ben Milne the Peter Thiel (or any of the other PayPal mafia) of our generation? It’s a little early to say, but what can be said is Dwolla is picking up the reigns from the once ambitious PayPal to rip financial infrastructure control from east coast bankers’ cold dead hands. If FiSync reaches critical mass and kills ACH it’s only a matter of time till a Dwolla API is powering every transaction, making a quarter on any one over $10. If I’m an ambitious VC with a creative imagination this is what I’ve dreamt up about Dwolla and I’m throwing hoards of money at them for ownership.

I dislike politically entrenched banks; I am a good libertarian after all. So I’ll raise a glass to Mr. Milne and company in hopes they reach their goal and further. Their dreams may not be as large as Elon Musk’s but they’re similarly important in a different industry.