Dwolla Launches Updated API for ACH Transactions

© Can Stock Photo Inc. / dcwcreationsIt’s now easier and faster than ever to hook into the ubiquitous Automated Clearing House network, thanks to Dwolla.

With the new version of its bank transfer API, released yesterday, Dwolla may not be able to speed up ACH settlement times, but everything else about the experience should be faster for impatient fintech firms. Dwolla’s new API allows users to bill customers later, and for variable amounts — it’s being called on-demand bank transfers. (ACH happens to be speeding up on its own, with same-day settlement coming along, well, one of these days.)

Along with crafting a new API, Des Moines, Iowa-based Dwolla redesigned the developer portal and improved the bank verification process, according to a company press release. Dwolla’s existing ACH API will continue to operate as usual.

“Small fintech companies want to move through the banking system,” Dwolla CEO Ben Milne told Bank Innovation. “But finding a bank, the contract, the tech systems, raising capital — it can be difficult to work with a bank. It took Dwolla two years. We can help businesses get up and running in nine days.”

The straightforward API interface masks a good deal of complexity and hard-won experience from Dwolla’s years in the industry. For example, there are more than 80 return codes in ACH transfer, not including transfers requiring corrections. The codes are not even as beautiful as Windows error codes, Milne said.

And the need for human-readable notifications is greater than ever, with globetrotting treasury officers increasingly wielding mobile devices in their work. “Push notifications didn’t exist when ACH was created,” said Jordan Lampe, director of communications and policy affairs at Dwolla. That was some 40 years ago — but there’s finally positive changes coming to ACH. With FiSync, Dwolla’s own realtime interbank payments network, users always know where their money is. The new ACH API also provides status updates beyond what can be expected from ACH alone.

In a sense, ACH is a competitor of FiSync, but Milne doesn’t view it that way.

“If ACH went realtime, we’d be dancing in the streets,” he said.

That’s because Dwolla, with its low-cost transfers, makes its living off the services, both in software and consulting, that it offers on top of the payments themselves. The new API allows on-demand bank transfers and on-demand billing for services like Uber and Lyft.

“Getting billing right with bank transfers is incredibly difficult, Milne said. “Managing data, risk, authorization, variable amounts, no transaction fees, all due to Dwolla.js” — Dwolla’s protocol for bank transfers.

“This simple API packages over 540 pages of ACH operating rules and guidelines, years of strong banking relationships and experience, and a dynamic infrastructure designed to support new business models and reduce a platform’s time to market,” Milne said. “Since July, the demand for a more flexible, robust, and seamless ACH API has fueled our platform’s revenue growth by an average of 30% month-over-month.”

“Bank transfers don’t have to the black sheep of the industry,” he added.

Ben Milne is speaking about APIs and the plumbing of financial systems at Bank Innovation in Seattle on March 1. Request an invitation here.