Only good experiences here. I've also referred at least two other people who have been happy with Dwolla. Unfortunately their service is really important in the U.S., where transfers between banks aren't as easy as they are in Europe (and, I suspect, much of the rest of the OECD world).
Stripe is fantastic but 2.9% and 30 cents isn't trivial vs 25 cents if you're trying to have a client pay you $5000 or $10,000. If Stripe nails ACH that might be another thing.
The other day I was trying to make some kind of transaction with Dwolla, and before I could, they asked me a series of questions to verify my identity.
The questions had obviously been pulled from a background check based on my name that I didn't know they had done. It was asking me what the price of a house was when I originally bought it, and what street I lived on in a given time period.
Outside of this being really creepy, all of the questions weren't actually useful for identifying me because they all applied to my father. I am a Jr., and the background check must have been run for my dad.
I also now have a reasonable idea of the price range my dad paid for a house that we moved into when I was 7, which I never would have known or asked about otherwise.
At this point I'm afraid to continue using the service. They allowed me to transfer $1,000 into it, but apparently don't know enough about me to let me make certain transactions. They should get everything they need for me to use 100% of their service up front, and not have this staggered approach where additional identity info is required to transfer money, at the last minute when you're trying to do the transfer.
Right now it seems that they could at any arbitrary moment determine that they haven't actually identified me well enough, and suspend my account.
I don't think Dwolla is the payment solution we've been looking for. At least not yet.
My understanding is that Dwolla is trying a fairly unusual approach to handling fraud, which is that they pay out of their own pockets for fraud (instead of kicking it down the line as all other financial institutions do) but this requires that they actually prevent fraud, not just identify it after the fact. And the cost of really stopping fraud turns out to be something that many people do not feel comfortable paying when they're personally confronted with it.
Kind of, Trade Hill lost a hundred thousand or so when Dwolla falsified their tranaction record and stuck them with the fraud. This was a bunch of reversed ACHs (which Dwolla claims they don't allow). Very shady company.
FYI, those sound like credit check questions. They probably did some sort of credit pull.
(They know the answers to these because the credit reporting agencies know how much the house cost, where it was located, what previous address(es) you've had on your credit accounts (including credit cards), etc.)
SSN data isn't flawless. My brother and I somehow had the same SSN until I was in my teens (right as I started working but before he did so thankfully it wasn't too difficult to fix).
Doesn't matter. The credit bureaus mix people up all of the time, particularly if you shared a name and street in the past.
My wife and mother in law share a first name. And a middle name that varies by one letter. (Ie. Mary Ann and Mary Beth) credit reports routinely mix them up.
When I was in school in 1996, a collector managed to get a business debt of my grandfather (who shared a name and died in 1986) attached to me.
Yes, sale prices can be found in public records. Just look at sites like Zillow, you can look up any property and they'll show you a history (I'm not sure how far back they go) of the sales history of the house.
I guess they are, it just wasn't something I expected to learn at that time in that way. So I guess it isn't really a big privacy issue, just a strange experience.
I would have been more comfortable with it if it had been part of the original screening, and not something that popped up randomly before a transaction, after I had already moved money into my account.
Dwolla did not perform a "background check" in the sense that you may think. When dealing with online fraud, it's common to use identify verification services like IDology (and a few others) that basically provide an API to generate these types of questions based on public records matching your name/address. Many banks use the same verification services.
This. Experian provides the same service, it's usually ~$3/pop if I remember right. This gives you those "Did you live with a Paul Foo at 378 Combinator Way from 2006-2009?" questions.
I also now have a reasonable idea of the price range my dad paid for a house that we moved into when I was 7, which I never would have known or asked about otherwise.
It's a matter of public record. You can probably type the address into Google to find a site that shows you the full transaction history on the house. Here's the house where I spent most of my childhood:
The "background check" questions for verifying your identity will have been drawn from a credit reference agency or similar. It may seem creepy, but actually if you want to verify someone's identity online and mitigate the risk of identity theft, the alternatives are limited. Of course the fact that they mixed you up with your Dad is unfortunate to say the least; your date of birth should have disambiguated you.
What they should have done is explained this, rather than just baldly present you with what appear to be alarming and intrusive questions.
Having different levels of service depending on the level of identity assurance is sensible for many applications, but for a funds transfer system I agree that it does not seem sensible.
Clowns implies that they screwed something up or did something wrong - from his story, he signed up and moved 5 figures of cash immediately (which is either exactly the limit of a business account or over it, see https://www.dwolla.com/about ) if I were in the payments business (and I was previously) this would have been a fraud red flag.
This is something that happened today (April 18th) - this is not five days of waiting around for money to free up. This is a gripe because the author triggered ever fraud alarm in the book and they have not responded fast enough.
I'd lean towards the "give them a little bit a of break" - yes it sucks he had to provide additional documentation and they haven't sorted it out yet, but no business could allow anonymous folks on the web to sign up and move 5 figures of cash providing only publicly available information as documentation.
This is an excellent point, the site says "Up to 10,000 for businesses, with the possibility of increasing it". So obviously he's opened a brand new account, and then tried to pull more money than he's authorized for. That seems like it would take some time, and I would have talked to Dwolla before I had them send the money.
On a side note, I love their payment method comparison matrix (on the page you linked). It's factual, but a bit cutesy, and just a little bit mean to Paypal (who totally deserve it).
I opened an account about a year ago and did nothing with it. I had my account suspended about a week ago, after not really touching it that whole year. When I asked Dwolla about it, they couldn't tell me why it had been suspended, so I just closed the account. Very unprofessional, all around, I was very glad I never attached any real accounts to it.
I currently use Dwolla for transferring funds over to Mtgox. Given this information, is there a better service for getting funds from a bank account over to Mtgox without doing a wire transfer?
Citibank and Chase both have money transfer services via email. QuickPay and PopMoney, I believe. I have used both of them and they work. The sender needs to have an account with the originating bank, either Chase or Citi but the recipient can have an account anywhere with a routing number and account number. The bank facilitating the transfer will ask for ACH access to your receiving account and place some small transfers into your account. When you see those transfers they are like activation codes which you then use to validate that you are the owner of that account.
This certainly works in one off situations but I would love to see Citi or Chase productize this via an API for authorized merchants, etc.
What a poorly written and immature article! Calling Dwolla "a bunch of clowns" because you couldn't get your account verified right away is just ridiculous.
It's also ridiculous to claim to "understand the whole fraud aspect" and then imply that they are engaging in fraud because the money hasn't been transferred back to the other guy's account within a single business day. And claiming that Dwolla is too good to be true because it didn't work out for you right away? Really you want us to take you seriously?
These things take time and these businesses cannot and should not be run without adhering to processes and rules that aren't transparent to consumers. As a payment processor, a false positive is much worse than a false negative.
Dwolla is providing a fantastic and much-needed service. In my experience the people at Dwolla are providing a great service and doing a good job of it. Their support has been responsive and very well done.
'Currently, there's 10s of thousands of dollars that have been removed from my business partner's account, that are sitting in Dwolla's accounts, that Dwolla claims they will "return in due course."'
That should never happen. If there are fraud problems, they should be clarified and settled before the fact, not while they hold onto the cash. The sum is too large to take to small claims court and I imagine too large for the author to just write off.
I did read it, and I see no evidence that they are holding on to the cash.
Dwolla was trying to verify his information at this morning at 11 am. His business partner transferred money through Dwolla, so of course that's where it is right now waiting to get passed through to him.
If Dwolla is actually holding on to the money and refusing to give it back, then there's a story — but I don't see any evidence of that.
Like I said, these things take time. I believe this post was published about 3 hours after they called to verify the account — he tweeted about it at 2:06 PM.
The original one were you could transfer in, transfer out, buy bitcoins, all in a 24h window - or the current one were it takes paperwork, and 30 days before they allow you to even send funds out that are in your account?
As far as I can tell, Dwolla is only a good fit if you have a business that can't take credit cards (high risk, or sells CC processor "banned" items like Kratom), which actually quite well explains why they are so difficult to work with (due to fraud checks and prevention).
News flash: Customers get upset when they give you their bank details and you act like an opaque, incompetent bunch of stonewalling nitwits. They will jump to all sorts of conclusions that aren't necessarily justified if one is aware of the whole story. Ric Romero has film at 11.
Got a problem with that? Don't go into the payment-processing business.
I can understand this guy's frustration. While I've never used Dwolla before, all the negative reviews of it make sure that I will never use it. Hopefully Ripple and OpenCoin take off, in the meantime it's probably better to use traditional methods of money transfer.
Is there really no "good-guy" alternative to PayPal? Since PayPal froze my account several years ago and robbed me of 2K, I have been in search of a better alternative. First came WePay, I tried using it, but it was awkward and slow, it took weeks to transfer a simple $500 in the U.S. between verified accounts, and customer service wasn't all that helpful. Then came along Dwolla, I haven't had any large transactions here yet, but it's been slow as well, and unwilling to work with me and my buddy with whom we share a referral credit -- not a very good beginning to start a relationship with a customer. And now this article. Le sigh.
The problem is, payment processing is hard. Fraud is a real problem, that costs real money and takes a massive amount of effort to prevent. You can limit your exposure (eg Stripe) by placing limitations on your solution (limit by country, by transaction types, etc), but there is no fix for it.
Big banks don't do much better than Paypal in regards to fraud prevention, the major difference is that they are regulated more tightly so they can't just freeze your money without recourse.
Zipmark is a possible alternative. They're also tackling ACH payments but in a fairly unique way. Haven't used them though so can't vouch one way or the other.
Well, If its in the tens of thousands of dollars ($10,000) for a .25 cent charge, this seems like alot of risk to handle in house. Ie at that size 1 in 40000 transactions could be fraud and they would be breaking even on the .25 cent charges, assuming there is no overhead to running this business.
>>>>>>"What I will not gladly do is let a bunch of folks who I have no idea who they are other than a web site ever again reach into my bank account."
Maybe you should have thought about that before you decided to let them handle so much of your money. To me, this is putting a LOT of faith in web site to handle that much money right away on a brand new account.
wtf. they are a lot more than just a website. they're a front end on top of "The Members Group" which IIRC is a financial services company for a ton of banks. But to say that all they are is a website is pretty lame. Sorry you couldn't move 5 figures of cash on hours after you create an account.
I tried to use Dwolla and it it was absurd. I set my account up fine. My friend sent me $1200 for a ski lease. I withdrew it and it appeared to work. Days later when the money did not appear in my bank account, I checked back and it said, "processing withdrawl" (or something like that.) It said that for many days before I contacted them. They said I needed to scan my drivers license and send it to them. The only account that has a copy of my DL is the DMV. No other company in capitalism asks for a scanned DL except for (maybe?) my employer. They had my social for crying out loud! And their UI was so broken that it wasn't clear that anything was wrong. At that point I refused to deal with them and kicked the money back to my friend and had him go through paypal. To top it off, they won't delete my personal details from their servers.
When did you open those accounts? "Know Your Customer" (which basically translates to SSN, government-issued photo ID, and blacklist checks) has been required of all US banks since 2003 thanks to the 2001 PATRIOT Act.
When I was 15, I was able to open a checking account by mail with no ID. Today, every bank I use lists government-issued photo ID as a requirement right on the website before you can start applying.
I work at a major online bank in the US. We have strong "Know Your Customer" policies as required by the Patriot Act, but they do not, in the normal course of business, require a copy of an ID. The Patriot Act does not require IDs, it requires processes to identify the customer, and different banks approach that differently.
No, ING Direct USA was always a United States bank regulated by US regulators, it just happened to be owned by a Dutch parent company (and thus ALSO subject to THEIR regulators in some ways). Capital One since taking over and rebranding as "Capital One 360" has not made any major changes to the Know Your Customer process or the application process. As I explained before, the legal requirement is to identify the customer, and there are a variety of different ways to do this which are acceptable to regulators.
A drivers license is a higher trust level document, as your driver ID and document number can be tied to an actual, trusted physical interaction, and it links you to a physical location.
SSNs are horrible IDs for a variety of reasons. Thousands or millions of Americans do not have valid SSNs or use EINs for personal IDE identification.
Why is it that people think that they can open a payment account, transfer thousands of dollars into it as their first transaction and no one will ask any questions or be the least bit suspicious?
I have both bitcoin and dwolla, and between the two I've found Bitcoin much more useful. Dwolla has a difficult business model these days, and I will be sorry to see them fail. But they will fail.
I had some minor issues with Dwolla or at least my perception of how they work that left a bad feeling for their brand and operations.
A buddy paid me money he owed me through Dwolla. I made the 'mistake' of leaving it in the Dwolla account instead of pushing it on to my bank account. A month later his bank was allowed to pull that back out because he had overdrafted.
This is something about the US banking system that I find completely crazy. Other banks/companies can 'pull' money from your account. Where I come from, all bank transfers are 'push' as far as I'm aware. Ie. the sender of the money has to specifically authorize an amount to be sent. In the US it appears that in a lot of cases, the receiver of money can specify the amount they want to receive and simply pull it from the senders account.
My guess is convenience. If you had to authorize a certain amount then in some cases people wouldn't authorize the right amount which would cause exceptions. It's much easier to just write merchants a figurative blank check and chargeback in case of an error.
Yeah, but Dwolla isn't a bank. And even if they were, just because someone sent me money a month ago doesn't mean their bank is entitled to some of what is now my money when they get overdrawn now.
ANY company can do this including your employer. A dogshit group of villans I used to work for pulled money from an employee's bank account that had been deposited from a paycheck because he took two weeks vacation to train for a new job. Was it legal? Almost certainly not, but it happened.
After this happened to my friend, I set up my deposit account as a sort of shell account where anything that enters gets transferred by the bank into a separate account.
This is not true, it obviously varies by bank. Bank of America allows free online transfers to other B of A accounts, and it costs between $3 and $10 to transfer to accounts outside the bank. The $3 option to transfer between banks is pretty fast, while the free, inside bank option is instantaneous.
As a counter point, in 2005, I had a BofA branch in New Mexico say I need a business account to do a transfer to a BofA in Washington state - and otherwise they’d do a wire transfer for $50. (When I was in Wa state transferring to NM was free.)
It could be time has made things better - or it could be you live in one of the better BofA fiefdoms...
7 years is a very short time in the world of banks.
I personally would prefer to never have to change banks again in my life - and since my banking has been near entirely online since the late '90s that has seemed reasonable for almost 2 decades.
In fact Citibank closed down my account type/product, and required I go through the whole rigmarole to set up a new account (vs just converting my account). Wells Fargo, started requiring fingerprints to do any action with my account. (Bad neighborhood - but depositing a check shouldn't require a fingerprint. ) And BofA did the above when I was flying between Seattle and Santa Fe every 3 weeks.
After BofA I switched to a local bank in Los Alamos (a town I've not been to in 5 years at this point) and it's working out splendidly.
Maybe the time you spent doing it the way you used to do was not in vain at all. Security is not really something you can sell at a poor price.
If they can lower their prices, and if their business allows them to retain your money, maybe they want to target clients who are 120% cristal clear clean, because that's how most client are.
They're not bugged by that tiny percentage of people they prefer not to validate because paranoia can rule you out easily. You had the bad luck of having a bad smell even on all the paperwork you have them.
That's like calling brown people terrorists. That's not racist or mean. That's just unfortunate. Sometime security is a real bitch. That's just pickup up the pieces. That feels bad, but it's for a good cause.
Well I'm not the one pushing for racist policies. that's just how the US defends itself. I'm against it, but that's the only way the US does it. Because the US is isolated from having good relations.
Now back to how corporations filter things. How would you do it ? Nobody wants to do it.
My Dad owns an ACH processing company. This is typical for any electronic payment processor. It does sound like they went overboard with the identity verification.
It just goes to show that disrupting payment processing is not just about some awesome new payment API. It's also about preventing fraud and crime without pissing your customers off. From my observations, this problem has yet to be solved.
Their passive-aggressive credential demanding is nasty - I tried to create a basic account and then the demands started. Calling them clowns is insulting - to clowns. Dwolla: you are supposed to be upstanding midwestern folks: be G-D UPFRONT about your requirements!
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[ 2.2 ms ] story [ 213 ms ] threadThe questions had obviously been pulled from a background check based on my name that I didn't know they had done. It was asking me what the price of a house was when I originally bought it, and what street I lived on in a given time period.
Outside of this being really creepy, all of the questions weren't actually useful for identifying me because they all applied to my father. I am a Jr., and the background check must have been run for my dad.
I also now have a reasonable idea of the price range my dad paid for a house that we moved into when I was 7, which I never would have known or asked about otherwise.
At this point I'm afraid to continue using the service. They allowed me to transfer $1,000 into it, but apparently don't know enough about me to let me make certain transactions. They should get everything they need for me to use 100% of their service up front, and not have this staggered approach where additional identity info is required to transfer money, at the last minute when you're trying to do the transfer.
Right now it seems that they could at any arbitrary moment determine that they haven't actually identified me well enough, and suspend my account.
I don't think Dwolla is the payment solution we've been looking for. At least not yet.
Dwolla has to keep fraud below a very low threshold to stay in business, any more and their partners will stop working with them.
(They know the answers to these because the credit reporting agencies know how much the house cost, where it was located, what previous address(es) you've had on your credit accounts (including credit cards), etc.)
http://www.meridianlink.com/creditAPI.asp
I have personally used this API, and it works.
My wife and mother in law share a first name. And a middle name that varies by one letter. (Ie. Mary Ann and Mary Beth) credit reports routinely mix them up.
When I was in school in 1996, a collector managed to get a business debt of my grandfather (who shared a name and died in 1986) attached to me.
I would have been more comfortable with it if it had been part of the original screening, and not something that popped up randomly before a transaction, after I had already moved money into my account.
It's a matter of public record. You can probably type the address into Google to find a site that shows you the full transaction history on the house. Here's the house where I spent most of my childhood:
http://www.redfin.com/IL/Third-Lake/186-Mainsail-Dr-60030/ho...
What they should have done is explained this, rather than just baldly present you with what appear to be alarming and intrusive questions.
Having different levels of service depending on the level of identity assurance is sensible for many applications, but for a funds transfer system I agree that it does not seem sensible.
This is something that happened today (April 18th) - this is not five days of waiting around for money to free up. This is a gripe because the author triggered ever fraud alarm in the book and they have not responded fast enough.
I'd lean towards the "give them a little bit a of break" - yes it sucks he had to provide additional documentation and they haven't sorted it out yet, but no business could allow anonymous folks on the web to sign up and move 5 figures of cash providing only publicly available information as documentation.
On a side note, I love their payment method comparison matrix (on the page you linked). It's factual, but a bit cutesy, and just a little bit mean to Paypal (who totally deserve it).
This certainly works in one off situations but I would love to see Citi or Chase productize this via an API for authorized merchants, etc.
It's also ridiculous to claim to "understand the whole fraud aspect" and then imply that they are engaging in fraud because the money hasn't been transferred back to the other guy's account within a single business day. And claiming that Dwolla is too good to be true because it didn't work out for you right away? Really you want us to take you seriously?
These things take time and these businesses cannot and should not be run without adhering to processes and rules that aren't transparent to consumers. As a payment processor, a false positive is much worse than a false negative.
Dwolla is providing a fantastic and much-needed service. In my experience the people at Dwolla are providing a great service and doing a good job of it. Their support has been responsive and very well done.
'Currently, there's 10s of thousands of dollars that have been removed from my business partner's account, that are sitting in Dwolla's accounts, that Dwolla claims they will "return in due course."'
That should never happen. If there are fraud problems, they should be clarified and settled before the fact, not while they hold onto the cash. The sum is too large to take to small claims court and I imagine too large for the author to just write off.
Dwolla was trying to verify his information at this morning at 11 am. His business partner transferred money through Dwolla, so of course that's where it is right now waiting to get passed through to him.
If Dwolla is actually holding on to the money and refusing to give it back, then there's a story — but I don't see any evidence of that.
Like I said, these things take time. I believe this post was published about 3 hours after they called to verify the account — he tweeted about it at 2:06 PM.
The original one were you could transfer in, transfer out, buy bitcoins, all in a 24h window - or the current one were it takes paperwork, and 30 days before they allow you to even send funds out that are in your account?
As far as I can tell, Dwolla is only a good fit if you have a business that can't take credit cards (high risk, or sells CC processor "banned" items like Kratom), which actually quite well explains why they are so difficult to work with (due to fraud checks and prevention).
Got a problem with that? Don't go into the payment-processing business.
Big banks don't do much better than Paypal in regards to fraud prevention, the major difference is that they are regulated more tightly so they can't just freeze your money without recourse.
I understand that fraud is serious. However, I'm very disappointed that I wasted a lot of time trying to signup with them too.
Maybe you should have thought about that before you decided to let them handle so much of your money. To me, this is putting a LOT of faith in web site to handle that much money right away on a brand new account.
When I was 15, I was able to open a checking account by mail with no ID. Today, every bank I use lists government-issued photo ID as a requirement right on the website before you can start applying.
SSNs are horrible IDs for a variety of reasons. Thousands or millions of Americans do not have valid SSNs or use EINs for personal IDE identification.
A buddy paid me money he owed me through Dwolla. I made the 'mistake' of leaving it in the Dwolla account instead of pushing it on to my bank account. A month later his bank was allowed to pull that back out because he had overdrafted.
How is that even possible?
It could be time has made things better - or it could be you live in one of the better BofA fiefdoms...
I personally would prefer to never have to change banks again in my life - and since my banking has been near entirely online since the late '90s that has seemed reasonable for almost 2 decades.
In fact Citibank closed down my account type/product, and required I go through the whole rigmarole to set up a new account (vs just converting my account). Wells Fargo, started requiring fingerprints to do any action with my account. (Bad neighborhood - but depositing a check shouldn't require a fingerprint. ) And BofA did the above when I was flying between Seattle and Santa Fe every 3 weeks.
After BofA I switched to a local bank in Los Alamos (a town I've not been to in 5 years at this point) and it's working out splendidly.
If they can lower their prices, and if their business allows them to retain your money, maybe they want to target clients who are 120% cristal clear clean, because that's how most client are.
They're not bugged by that tiny percentage of people they prefer not to validate because paranoia can rule you out easily. You had the bad luck of having a bad smell even on all the paperwork you have them.
That's like calling brown people terrorists. That's not racist or mean. That's just unfortunate. Sometime security is a real bitch. That's just pickup up the pieces. That feels bad, but it's for a good cause.
Now back to how corporations filter things. How would you do it ? Nobody wants to do it.
It just goes to show that disrupting payment processing is not just about some awesome new payment API. It's also about preventing fraud and crime without pissing your customers off. From my observations, this problem has yet to be solved.