Magazine article American Banker

Dwolla Pitches Fast Fund Transfers, but Bank Participation Is Vital

Magazine article American Banker

Dwolla Pitches Fast Fund Transfers, but Bank Participation Is Vital

Article excerpt

Byline: Sean Sposito

Automated Clearing House payments are cheap, but compared to other payment methods they are slow, and companies are constantly developing adaptations and alternatives to make such payments in real time.

Dwolla, of Des Moines, is the latest company to talk up cheap real-time transfers. It began developing its product, FiSync, last year. This week it is opening it up to more banks and credit unions.

Dwolla, an alternative payments company, says its system moves money at least as fast as a credit card payment but at a cost that rivals ACH. The company is offering free software tools to allow banks to link to FiSync, though banks must first register as developers. FiSync transfers will also be free during a promotional period.

And FiSync seems to work as advertised: In a demonstration shown to American Banker, Ben Milne, the founder and chief executive of Dwolla, used FiSync to move $4,000 to a Dwolla account in a matter of seconds from an account at Veridian Credit Union of Waterloo, Iowa.

"It's the equivalent a[bar] [of] bank transfers, which are real-time, so it takes out the delays and we built this whole framework into a product," he says.

If FiSync takes off, it could reduce banks' need to work with card associations and processors, Milne says.

The technology requires a network effect a for transfers to take place, enough banks must agree to use FiSync, properly integrate it into their core banking systems and accordingly market the capability to consumers. …

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