Hoping to Boost Volume, Dwolla Debuts A Service That Simplifies Sending Payments

Alternative payment network Dwolla Inc. has added Dwolla Direct, a method for individuals and organizations to send a payment via the network without registering for a full Dwolla account.

Instead, they complete an online form that asks for an e-mail address, password, and bank account information. The process takes place on four screens, and happens in as little as 15 seconds. The payment flows as a debit on the automated clearing house network. Recipients must have a Dwolla account to receive the funds.

Dwolla Direct is a service that the Des Moines, Iowa-based network hopes will spur more payments on its system. Dwolla  charges 25 cents per transaction to receive funds. In May, Dwolla added next-day transfer capability to its network.

Direct addresses concerns about creating yet another account by reducing the amount of information required, instantly validating senders\' bank accounts, and marrying a first-time payment experience with account creation, all meant to aid repeat usage, Dwolla says.

“We found a way to gather that information efficiently and effectively without causing too much stress on the sender,” a Dwolla spokesman says.

Dwolla hopes businesses use the service. “It is a proactive step to helping businesses overcome checks,” the spokesman says. It provides a way for businesses to better know where their money is and when it is expected, he says.

Dwolla also sees the service as a way to help small businesses in particular take advantage of the ACH network without incurring great costs. “This is us trying to answer that conundrum,” the spokesman says. “This is a simple way that SMBs can access and leverage the ubiquity and low-cost of the ACH to their business advantage, today.”

Dwolla’s use of an expedited way to send money could be very positive for electronic payments, says Nancy Atkinson, senior analyst at Boston-based payments advisory firm Aite Group. Dwolla Direct is an effort to build the network’s market share, she says. “There has been movement from paper check to electronic checks,” she says. And using the ACH system for the service could aid Dwolla. “ACH, especially for business-to-business type of payments, does add a lot of value because it’s less expensive for the most part.”

Dwolla Direct will be available June 25.