Des Moines, Iowa-based payments innovator Dwolla announced another payment innovation: Dwolla Direct, which lets individuals and organizations send money over the Dwolla network without registering for a full account. The service is slated go live Wednesday.

The belief is that most consumers do not want to sign up for yet another account, and that reluctance has hindered broader adoption of Dwolla. With Dwolla Direct, a new user supplies an email address, a password and he/she verifies his bank or credit union.

There is no need to provide a routing number or an account number.

The user indicates the name of his or her financial institution, then provides account login credentials.

According to Dwolla the process, start to payment, can occur as quickly as 15 seconds.

Once set up, a returning user can initiate a new payment just by entering the username and password. Dwolla will remember the account information,

Dwolla insisted that existing users can continue to use the present Dwolla system.

“The impetus for Dwolla Direct is to help small businesses replace checks,” said Dwolla spokesperson Jordan Lampe in a CUTimes interview.

“We will use the existing check rails. In two to three days, the recipient will get the cash,” said Lampe, who indicated that the recipient will be charged Dwolla's customary 25 cent fee on transactions of more than $10. For transactions with a smaller dollar amount, the payment is free.

Fees imposed by competitor PayPal are significantly higher. The typical PayPal charge is 2.99% plus $0.30. On a $11 ticket, that's around $0.62.

“Our intent is to remove the excuses some merchants have for holding onto paper checks,” Lampe said. “We are trying to make ACH compatible with the 21st century. Paper checks may go away but the payment network will continue to work.”

Dwolla Direct has some similarities to Square Cash, a P2P tool; but, Lampe stressed, Square Cash rides the debit rails, while Dwolla Direct is ACH based.

Structurally, Dwolla is an agent of $2.5 billion Veridian Credit Union in Waterloo, Iowa. Funds in a Dwolla account are held in a pooled account at Veridian.

Instant Insights /

Dwolla Direct Launches Wednesday

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