By: Ben Milne,

We hear one of the following questions every day @ Dwolla:

Rather than continue to repeat ourselves. We would like to begin linking people 🙂

The best way to start this blog is by making the following statement. Paypal and Dwolla do not do exactly the same thing.

How is Dwolla better than Paypal?

Dwolla isn’t exactly like Paypal. We know people are frustrated with credit card fees which are commonly associated with Paypal and other services but this is really where we are different. Dwolla’s service does not do the same thing.

If you process credit card payments via Paypal, Authorize.net, Google checkout, and Verisign- these are the best solutions. Why are these services great? A few reasons are:

What about those looking to process credit card payments at a lower rate, or process credit cards for a merchant fee of 1%? Well, you can’t. These huge credit card processing companies have the same type of buying power a large distributor has. They can get you the best rates with the big CC networks. Dwolla can not.

There in-lies how Dwolla cuts out the processing fees. You can not use the types of payments that create the fees.

How is Dwolla different than Paypal?

Dwolla does not process credit or debit cards. Dwolla doesn’t allow anyone to use any existing network and carry it’s fees into our system.

Paypal is designed to easily process credit/debit cards for merchants and consumers. It can also process bank balances as well, but it fills a large need to easily and quickly transfer money.

Dwolla only allows you to bring in a “no-debt” or “cash” balance.

Why is Dwolla the best alternative to Paypal?

Dwolla can easily be used to supplement Paypal. We highly suggest using Paypal, Verisign, Authorize.net, or Google checkout to process credit/debit card payments. Dwolla allows you to to receive payment directly from Dwolla balances (or an outside funding source) at an exceptionally low cost. A few nice applications are:

Why should your business have a Dwolla account?

The bottom line.

Dwolla will never replace credit cards and it does not do the same thing Paypal does. Dwolla is not a credit card/debit card system. However. We do represent a solution to merchants looking for other ways to accept payment electronically. If you want to aviod the interchange fee ( aka. swipe fee & credit card fees ) you can’t use credit or debit cards . You need to use a different service. That service is called Dwolla.

If your company has not allowed electronic transactions to be used due to the swipe fee, Dwolla finally gives you a solution. Even when sitting down to write a check keep this in mind. Using Dwolla is less expensive than mailing a check, or driving it across town.

Please note – This blog is meant as a way to show some of the differences between Dwolla and other services. We hope it will also answer some common questions about how these services compare to one another. There have been a lot of misunderstandings about Dwolla’s service and applications. We hope this will help clear some of that up.

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Financial institutions play an important role in the Dwolla network.

Dwolla, Inc. is an agent of Veridian Credit Union and Compass Bank and all funds associated with your account in the Dwolla network are held in pooled accounts at Veridian Credit Union and Compass Bank. These funds are not eligible for individual insurance, including FDIC insurance and may not be eligible for share insurance by the National Credit Union Share Insurance Fund. Dwolla, Inc. is the operator of a software platform that communicates user instructions for funds transfers to Veridian Credit Union and Compass Bank.