Move Over, Visa/MC/PayPal - There's a new player in town that sidesteps you both [View All]

[housewolf]

and it's a "credit card killer" and "Square rival"

New Payment System Sidesteps Credit Cards

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Dwolla was founded by 28-year-old Ben Milne; it's an innovative online payment system that sidesteps credit cards completely.
Milne has no finance background yet his little operation is moving between $30 and $50 million per month; it's on track to move more than $350 million in the next year.

Unlike PayPal, Dwolla doesn't take a percentage of the transaction. It only asks for $0.25 whether it's moving $1 or $1,000.

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How does Dwolla work and how is it different from PayPal?

With Dwolla, payments are made directly from your bank account. No credit or debit cards are allowed. And because they don't exist in the system, we don't have to bring the fees into the system. You can spend any amount of money and when you do that, the person on the other end doesn't have to pay 1, 2, 3 or 4%. They only pay $0.25 a transaction, which is especially helpful when it's $1,000, $2,000 or $5,000 transactions. Obviously PayPal becomes very cost prohibitive with those larger transactions.

The biggest difference between ideas like this and a PayPal — and PayPal is a phenomenal idea, Square is too — is that those are built on top of networks like Visa and MasterCard. We're building our own.

Can users only send money to Dwolla members?
No, you can send money to anyone. Only the person sending it has to have a Dwolla account to initiate the transaction. The person receiving it will have to sign up for an account, but we've been surprised at the conversion there. It's worked relatively well. We leverage social networks really heavily as contact lists, which is one thing we do really different. You can send money with an email address or with a phone number, but the most popular way to do it is to connect to Facebook and type in a friend's name.

We think, in the long term, sending money should be as easy and effortless as finding a friend on Facebook. That's really a behavior we try to mimic when it comes to peer-to -peer payments. When someone does not have a Dwolla account, they get a wall post that says, "You've got money." If a friend sent that to you and it was their name and their face, you would have a different emotional connection to that than an arbitrary email

more...

http://www.thefiscaltimes.com/Articles/2011/11/11/The-28-Year-Old-Out-to-Kill-Credit-Cards-and-PayPal.aspx#page1