Dwolla’s Latest Integration Is a Deeper Dive Into Open Banking Technology

The payments-technology provider Dwolla Inc. has integrated its Dwolla Connect platform for account-to-account payments in open finance. The integration will enable Dwolla Connect clients to transfer open-finance data to the Dwolla platform, the company says. As a result, financial institutions and third-party open-banking providers, such as Plaid Inc. and MX Technologies Inc., can share tokenized financial data through the use of application programming interfaces (APIs) when initiating account-to-account payments.

The integration of Dwolla Connect, which launched in August, to the open-finance ecosystem was prompted by the growth in open banking technology, the company says. “As 87% of consumers utilize open banking, businesses need a trusted solution to exchange financial data, simplify payment processes, and enhance overall security, and this integration addresses that demand,” Skyler Nesheim, chief technology officer for Dwolla, says by email.  “It has become essential for embedded-payment products to be interoperable with the open-banking ecosystem.”

Open-banking technology allows payments and finance companies to access consumer accounts to verify ownership and funds availability for funds transfers and other transactions.

A key driver behind the growth in open-banking technology is that it eliminates many of the barriers to sending and receiving money directly between accounts, says Cliff Gray, a senior associate at the payments consultancy TSG. “Account-to-account payments are commerce, and everyone is either riding this wave or trying to,” Gray adds.

Central to Dwolla Connect’s opening-banking capabilities is its Secure Exchange Solution, which enables the Dwolla platform to be more interoperable with third-party providers. Launched in 2022, the Secure Exchange Solution facilitates account-verification connections with leading data-aggregation partners by providing a tokenized solution. Supported ecosystem partners can be found by calling the exchange partners’ API, which contains a catalog of activated partners, Dwolla says.

“Utilizing Dwolla’s Secure Exchange Solution enables businesses to embrace open-banking tools as part of their payments workflow and eliminate complex and lengthy integration processes,” says Nesheim. “In addition, the tokenized exchange of information significantly enhances security, while simultaneously fostering an open environment that prioritizes customer experience, security, and innovation in digital financial services.”