Payment systems aren’t always all they’re cracked up to be. Business owners have spent many a night pulling out their hair over errors and days spent waiting for funds to clear on either end of the payment.

Enter Dwolla, a company promising to revolutionize your payment system with a new kind of API. Do they live up to the claim? Here’s everything you need to know about the company and what they have to offer.

A Brief History

The company was founded back in 2008, but only offered services in Iowa at the time. At that time, there were only two employees working to turn this venture into a thriving business. After acquiring a sum of $1.31 in funding from Union Square Ventures, Foundry Group, and Andreessen Horowitz, Dwolla was able to make a full-scale launch in the United States.

By 2011, the company now included 15 employees and over 20,000 users while processing $1 million a week. They remain a popular choice for online payment systems and mobile payment networks today.

What Is This Platform?

When answering the question, “What is Dwolla?” the answer is many things. To sum it all up, you could say that it is a payment API (Application Programming Interface) designed to make Automated Clearing House (ACH) payments easier. ACH is an electronic network that processes large volumes of credit and debit transactions in batches, which can also include payroll or vendor payments as credit transfers.  

Expanding upon that initial question, the difference that makes this company so unique is all in the API. From its white-labeled design to real-time identity verification, it’s a beast all of its own.

Understanding The API

Whether your business uses bank transfers or ACH, moving money can be a complicated task at times. Implementing an API system can be an even larger nightmare, depending on how it was developed and built. Dwolla’s idea is that API can be implemented in a way that is easy to implement, use, and maintain.

Understanding REST

The API uses Representational State Transfer, which means URLs represent resources in the system. That could be customers, bank accounts, money transfers or anything else your business may need to use. Those URLs are then changed using HTTP verbs such as GET, POST, and DELETE.

Essentially, it’s coding made easy. Instead of entering complex lines, you simply input the data you need in plain English. This is made possible with JavaScript Object Notification (JSON), which uses standard language to transmit data. With the flexibility to build a flow for purchases, sales, and transfers between customers, business owners can move money around more easily.

HATEOAS

H-what? That stands for Hypermedia as the Engine of Application State. It sounds confusing, but you come into contact with hypermedia every time you use a web browser. Browsers deliver links that you can follow if you would like to, which is the idea of hypermedia.

Using HATEOS with API allows for the system to tell you what the relationship between link sources are. To simplify things, let’s say you ask for a list of your customers. Dwolla sends you a page of results along with a link to call on the next page or set of results. Once you reach the end, that link goes away.

This helps keep business logic in the API instead of in your application. Plus, you can easily access the information you need at any time.

HAL

Hypertext Application Language (HAL) is used in conjunction with HATEOS to help return and format links. This gives you the URL, any embedded resources, and the state. It also saves you the hassle of figuring out how to take the ID of a resource and transform it into a full URL.

With embedded resources, you can also identify errors in record time. HAL includes a detailed list of any validation errors within the URL. Say goodbye to the days of end-user validation errors and hello to simple fixes.

Finally, there is the Dwolla Hal Form spec. This extension of the basic HAL spec allows the API to return information about data fields that need to be collected, as well as how they should be validated. So, when a customer’s information changes, you can easily update the information to eliminate any errors in payment processing.

Using the System

Getting into the API is as simple as using your Dwolla login. Simply sign up for an account, then enter your email address and password in the future. From there, you can take advantage of everything the company has to offer.

Payments

Starting with payments, you have ready-built mass payment tools to get your business up and running within the ACH API. This allows you to:

  • Send payments to customers
  • Receive payments from customers
  • Transfer payments between customers
  • And send out mass payments

Using ACH is a cost-effective way to collect funds from a customer’s bank account. When combined with the API, you’re able to choose from a variety of integration options for both you and your customer’s needs. For instance, there is the OAuth integration that takes care of every aspect and the API payments system that allows you to control the customer experience.

Whichever you choose, you are also able to accept payments without incurring any cost. Even better, you can implement a facilitator fee to earn revenue on top of the ACH payments you facilitate. Dwolla payment is designed to keep things simple while helping your bottom line.

Real-Time Transfers

FiSync is another interesting feature, which allows for Dwolla instant transfers. Combined with the API, financial institutions of any size can create new products and value-added services that open up additional streams of revenue.

By getting your business approved, you can also take advantage of next day bank transfers, cutting the standard wait times commonly associated with ACH by up to 2 business days. Since financial institutions in the United States have made this a common function, Dwolla’s banking partners have worked with them to provide this highly beneficial feature.

This push is spurred by the company’s desire to see new payment types integrated as quickly as possible. They also offer assistance in integrating the same day function, as they do with every new payment type, to help keep your business up to date.

Other Payment Features

The API also allows for some additional features that help your payment system unique. For instance, your customers can build a wallet-like balance right inside of your application. This way, they have more incentive to use your business again.

You can also collect pre-approved payments. If your business utilizes a multiple payment or subscription model, then you can set it and forget it within the API. Heading back to the embedded HAL features on HATEO, you can easily cancel recurring payments anytime.

Finally, there are mass payments. When it comes times to shell out mass payments directly to several bank accounts, you can do so by the thousands.

A White Labeled Design

The term “white labeled” means that a product or service is produced by one company, then rebranded by a second company to make it appear as if it is their own. When it comes to the API system, that means you can integrate Dwolla’s payment system to look like it belongs solely to your business.

Why would you need to do that? For starters, showing that your business has a reliable and simple payment processing method is a tremendous help in branding recognition. Your clients view the payment portal as your businesses’ and therefore identify the simplicity of it all to your brand name.

That level of seamless integration also brings with it a high level of security. If there’s one thing everyone loves, it’s safety when making virtual payments.

Safety Structures

There are two separate safety protocol systems in the API. Verification and authentication of your customer’s financial institutions is taken care of by Plaid while thwarting fraudulent behavior is handled by Sift Science.

What’s Plaid?

Its full name is Plaid Link, and it offers a secure way for joint partners to provide bank account verification with access to tokens. With tokenization, information is protected end-to-end from the bank account to Dwolla’s API.

The Plaid system itself functions like a vault of temporary tokens. That means your customers do not have to store sensitive information, and criminals who manage to hack a token find absolutely no value behind it. Only Plaid knows what the token means.

Sift Science

Sift uses large-scale machine learning with unparalleled accuracy to leverage a global network of fraud data. By doing so, it improves your risk management and predicts fraudulent behavior in real-time. As the API network of users and partners grows, you can rest assured that your business’ transactions are kept safe.

All you have to do is toggle the Sift switch to “on” in your account, then enter your API key to receive real-time risk scoring. With the same action, Sift automatically monitors and detects any iota of suspicious activity.

Pricing

Dwolla says they take a “consultative” approach to pricing. What does that mean? You don’t have to be a mega-corporation to afford the API system.

Your business is given a dedicated account manager along with developer integration support to help see your venture grow. So, start small and dream big. The company understands budget constraints and work to increase the size of your operation, which helps both of you in the long run.

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