Dwolla Moves Deeper into Commercial with BBVA Deal

  • Philip Ryan
  • October 30, 2014
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FiSync2Dwolla and BBVA Compass’s partnership to bring realtime payments to BBVA customers that was announced today brings Dwolla’s new role into sharp relief: Dwolla is not a P2P company; it is a B2B company.

Ben Milne, founder and CEO of Iowa-based Dwolla, has known this for some time.

“Dwolla got early traction in the media on P2P and social,” he told Bank Innovation. “But we’re really agnostic as a payments platform, and we’re providing B2B and B2C payments — real-time anything and everything.”

Leveraging its FiSync enterprise platform platform built for financial institutions, Dwolla can now bring its real-time capabilities to BBVA Compass’s 750,000 mobile customers, and more importantly, its business customers. This will be the first major bank in the nation to offer this capability, the bank said in a release today. BBVA Compass customers can access Dwolla’s APIs and payment tools to include Dwolla’s capabilities into their own businesses, as well.

FiSync launched in 2011 and has a number of bank customers, but none approaching the size and scale of BBVA Compass.

“Most of the players trying to disrupt the payments space are consumer-facing,” said David Kucera, director of business innovation at BBVA Compass. “But the value for us is expanding the network to connect all our customers to Dwolla’s real-time system.”

BBVA is known in the innovation space for its venture arm and its February 2014 acquisition of Simple — whose customers will also have access to Dwolla’s system.

“Dwolla’s real-time network is a platform for innovation for businesses,” Milne said, noting that real-time will take longer to attain ubiquity among consumers. And consumers may have less need for faster payments. “B2B payments are super-slow,” Milne said, referring to the rickety rails of ACH and credit cards (which underpin MCX and Apple Pay, respectively.) “We’re working on that.”

A move toward enterprise makes sense for Dwolla. Consider Frankfurt, Germany-based Traxpay, which launched in 2009 as a general payments platform, but refocused in 2012 as the “PayPal of B2B,” as TechCrunch described it in September, when it raised a cool $15 and partnered with MasterCard.

While Dwolla for businesses makes sense, the company was built with consumer pricing in mind. It is free for transactions under $10, and a flat $0.25 for each transaction $10 and over. This might not make sense as average transaction sizes climb as more business customers come on board. In Sweden, and likely elsewhere, real-time payments for consumers are subsidized by the higher costs of B2B payments. And yet it seems likely Dwolla’s ethos would prevent a jump in prices. Perhaps the scale offered by BBVA Compass and future bank partners will mean it doesn’t have to.

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Philip Ryan is Associate Editor of Bank Innovation. He worked as a web developer for the Fund for the City of New York for six years, and was an HTML developer at Ocean-7 Development back in the go-go ’90s. He has more than 15 years' experience in online journalism. He can be reached at pryanrmg1@gmail.com.

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