Dwolla Adds Next-Day Transfers, Harnessing the ACH System

Dwolla Inc. is in the next-day transfer business now. The alternative-payment network announced Thursday it is offering the service for withdrawals from Dwolla accounts to its users’ bank accounts.

Relying on the automated clearing house system, the transfer service is an opportunity to use an existing network while Dwolla continues to build its own, a spokesman says. Typically, bank transfers via ACH can take from two to four business days, depending on factors such as bank funds-availability policies. This service speeds up that process. When those funds are made available, however, is still reliant on the bank’s own rules, Dwolla says. Dwolla is a person-to-person and mobile payments company based in Des Moines, Iowa.

Dwolla’s customers, particularly its larger business-to-business users, had been asking for faster transfers, the spokesman says. Currently, the service only is available to Dwolla users with business accounts. Dwolla approves each account based on a review that examines the account’s transaction history, using Dwolla’s risk model. There is no additional cost for the service other than the fee of 25 cents per transaction the recipient pays for payments of more than $10.

“We\'re aggressively moving forward with our network, but we\'d be remiss if we didn\'t explore the potential applications Dwolla\'s work could have on existing network,” the spokesman says. “That\'s really what this is about. We\'re channeling the inherent strengths of the existing ACH infrastructure, while repackaging it and bringing it to market in a way that\'s more accessible, usable, and competitive.

This is not Dwolla’s first foray into speedier funds movement. In 2012 it tested a scheme that used the ACH to move money for its online and mobile payments platform. And in October it unveiled a service that enabled users to pay online merchants using credit rather their own money.

Meanwhile, NACHA, the organization that operates the ACH network is proposing same-day settlement. ACH transactions currently settle once a day on a next-day morning basis.