Our friends at Dwolla made an announcement today that could be a big boon for independent businesses with a high humber of low-dollar transactions. Customers can now make a cash-funded electronic purchase of $10 or less with no fees for either the customer or the merchant.
Since we haven't covered Dwolla yet on the Change blog, here's a quick rundown:
- Dwolla is a cash-funded electronic payment platform you can use to pay for pretty much anything, whether you're buying coffee at Mars Cafe, paying for an order of shirts at Eight Seven Central, or just sending some money to a Facebook friend to pay them back for lunch.
- Dwolla does NOT use credit cards. Users connect bank accounts (so existing cash, not new credit) to their Dwolla account to add and withdraw money.
- Dwolla transactions above $10 cost a quarter regardless of size ($11 or $11,000). Depending on the situation, the 25 cents will be charged either to the sender or the recipient.
While that 25 cent fee may not seem like much -- especially compared to credit card interchange fees -- it can still add up. Dwolla CEO Ben Milne specifically calls out the benefit to independent businesses on the announcement post:
Small businesses are something we genuinely care about. In our heads, the idea of Dwolla getting 25 cents for a 2 dollar coffee just sounds silly… It’s like using an AmEx card to buy a banana.
I've always felt silly (and more than a little guilty when at an independent business) when using a credit card to purchase something small, so there's definitely an emotional appeal to Dwolla's new fee-free transaction tier.
Dwolla is promising more big announcements later this month as their one-year anniversary approaches. Keep an eye on this blog and follow us on Twitter for news about updates like this.
Bonus: Check out this article on the Dwolla blog about how to get started taking Dwolla at your business.