Why we changed the game
Currently, payment networks are something which control you. We think it should be the other way around. Grid will redefine the way you interact with the Dwolla payment network, setting a new precedent for the way you interact with any payment network.
Think about it. Every time you want to do seemingly simple things, like buy a coffee, order some new shoes, or acquire some shampoo, current networks are requiring you to leave an ugly trail of personal and financial data behind you. It’s a major liability to you, the consumer, the network, and the merchant, and it is a major source of card fraud (which costs $8.6 billion in United States alone). This is because when you use your card you leave behind:
- Your CC information
- Your expiration date
These are really the only things someone needs to commit fraud. So every time you physically hand over a form of plastic to purchase a goods or services, you are exposing yourself for fake swipers, camera phones, heck, even a pencil and paper.
The question here seems relatively simple: If the big guys could start over today, would they really choose to build a system that inherently exposes them, their clients, and their merchants to such massive liability? I doubt it.
Second, since we aren’t bound by typical card processes, why not do it differently?
The answer also seems relatively simple and obvious: let’s rethink the whole thing… That’s precisely what we did with Grid.
What does this thing do?
- Provide third party developers with the tools needed to create a seamless purchasing experience in an app or an online purchase (no more entering painful credit card numbers!)
- Validate a new kind of payment network, one that doesn’t leave behind personal information.
- Serves as platform for future integration into mobile applications (Zaarly, Square, Google wallet, Mint, etc.)
- Puts consumers, not networks, in control of who can access, their payment information, and to what degree (allows users to revoke and alter third-party access to your payment network).
- Grant developers first time access to a payment network and its core technologies (in our case, location based c2b payments, social integration for p2p, 25 cent payment network)
Think about all the cool stuff Dwolla does?
- Low cost
- No scan, tap, or anything else.
- Just preference.
Imagine just being able to pull that into your home banking solution or paying for a Zaarly purchase in the app, or make payments in a grocery store. Imagine managing permissions to the application independently, allowing you to view and manage all applications, in real-time, you have access through our website.
Why this is huge for developers
The sky is the limit. For the first time ever, developers will have access to a payment network to innovate and build on top of and because the network is devoid of payment information, you remove a lot of liability that is typically associated with plastic networks (e.g. storing financial information and credentials, and pre-loading accounts or converting to a virtual credit system). You can actually implement cash into your software by integrating with this connect methodology.
Why this is huge for merchants / banks / third parties taking payment
In app/web purchasing just got really easy for developers without all the risk of storing cc/bank information. I don’t think I need to spend much time explaining to content publishers, business owners, or anyone else the value of that (hint: cost savings).
How much will Grid cost?
Access is free for everyone. Any developer can apply to use it. Heck, Square could even easily leverage Dwolla to increase its margins (we assume that they’d charge the merchant their same typical fee), as could Google. Will they? Well, who knows, but we still think it’s cool. We will still capture our regular fee of 25 cents on transactions over $10, while keeping those transactions of $10 and under completely free (note: this is still far cheaper than the usual 2-6% interchange and 30 cent processing fee of other networks).
We are working through implementation with half a dozen companies and will be happy to share those with you soon.
Ironically, the cash option might have just gotten more secure than the plastic option.
We believe that you should be the center of the payment network. Grid lays the groundwork to make that happen because at Dwolla, you are.
6.7.2011 at 3:10pm CST: Although distribution of the Grid (aka our Oauth API) for third-party development is free, we will still be accruing our 25 cent fee on transactions over $10.