Dwolla Corp. announced today that Veridian Credit Union has become the first financial institution in the nation to adopt Dwolla's FiSynch product, a Web service that securely synchronizes accounts at partnering financial institutions to provide a cash-based, real-time payment alternative to the Automated Clearing House (ACH) or other payment card networks.
"The cost, the fraud, and the lag times associated with moving money are systemic problems that are strangling innovation in our economy," Dwolla CEO Ben Milne said in a release. "To solve these issues, we turned our focus on fixing the bottom of the payment stack, (ACH), a 40-year-old structure that moves $33.9 trillion, and created FiSync, a simpler way to move money from Point A to Point B."
Branded by the Waterloo-based credit union as "Veridian's P2P (Person to Person) service powered by Dwolla," the add-on service provides the credit union's members with another option for sending money to any individual or for paying a merchant, said Eric Kinman, Veridian's marketing manager.
Integrated into the service is the ability for Veridian customers to instantly load money from their credit union account into their Dwolla account, or vice versa, with no upfront cost. "We're really honored to be on the forefront of this service," Kinman said.
The service, which Veridian began rolling out to its members in a soft launch beginning early this month, has so far attracted 649 of the credit union's 160,000 members to link their Veridian and Dwolla accounts.
Founded in 2009, Des Moines-based Dwolla is an online and mobile cash network that enables users to send and receive money from their bank accounts for 25 cents per transaction, using their mobile phones and social networks.
Dwolla's flat 25-cent-per-transaction fee for purchases or transfers of more than $10 applies to any transaction made through an account linked to a financial institution. In many instances, the merchant opts to absorb the transaction fee for the customers. Transactions or transfers below $10 are not charged a fee.
Though the person-to-person payment aspect of the product is exciting, the possibilities for small businesses are even greater, Kinman said. Provided a merchant being paid by a Dwolla member also has a business account with another participating financial institution using FiSync, it would no longer take the payment two or three days to clear the ACH network to reach the merchant's account. Veridian hasn't determined how many of its members who have linked to Dwolla have merchant accounts.
Regardless of whether the ACH network is used or bypassed in the transaction, Dwolla is charging Veridian the same fee - from one-tenth of 1 cent to three-tenths of 1 cent of the transaction amount -- that the financial institution would pay in making a transfer through the ACH network, said Jordan Lampe, a Dwolla spokesman.
The more financial institutions and merchants that enroll in FiSync, the more viable the network will become. Lampe declined to provide numbers, but said Dwolla's "pipeline is very full" with financial institutions interested in using FiSync.
The FiSync Software Development Kit is available at no cost to financial institutions and financial service providers via Dwolla's integration portal, fisync.dwolla.com.