In a letter to Tom Wheeler, chairman of the FederalCommunications Commission, and Richard Corday, director of the Consumer Financial Protection Bureau,Ben Milne, CEO of Des Moines, Iowa based payments innovatorDwolla asserts that a proposed FCC rule that would allowInternet bandwidth providers and mobile carriers to chargedifferent companies varying fees for carrying their contentrepresents a substantial threat to financial servicesinnovation.

Wrote Milne: “In response to the decision Verizon v. FCC,the FCC proposed a rule that we believe will harm both innovationand competition in the payments ecosystem. The rule tentativelyconcludes that both fixed and mobile providers of broadbandInternet access, primarily phone and cable companies, shouldtechnically be able to discriminate amongst applications and tocharge companies varying fees for varying levels of quality ofservice. This is a radical departure from how Internet accesscurrently operates and is a grave threat to an open Internet and toevery industry that relies on the Internet for commerce andinnovation.”

Milne used Dwolla as a case in point. Leveraging off Internetchannels, Milne said, Dwolla has been able to offer a service that“enables anyone or anything to send and receive payments for only25 cents or free for transactions $10 or less.”

Milne added, “The Internet is a conduit for payment innovationwithin the existing banking system. In addition to leveraging theAutomated Clearing House, which can take several days to processand transmit payments, Dwolla has used the Internet to create abanking application programming interface for financialinstitutions called FiSync.When integrated in partnering banks and credit unions, Dwollaoffers our customers real­time payments straight from their banksor credit union accounts.”

He also wrote, “Using the Internet, we've also been able tore­imagine security, transparency and privacy for consumers.”

But, stated Milne, an end to what has been called Net Neutrality– where all Internet traffic is created equally – threatensinnovation.

“The FCC's proposal would harm innovation, as emerging paymentsprocessors will be unable to compete purely on the merits of theirinnovations,” the Dwolla founder wrote.

Milne also argued that ending Net Neutrality would have anunintended consequence regarding fraud. “Handcuffing the latencyand bandwidth of data will only limit the ability of paymentnetworks to combat consumer fraud,” he wrote.

That's because fast Internet exchange of information, regardingcriminals and transactions, may be key to winning the fight againstcyber fraud.

Consumers, argued Milne, would be obvious losers if NetNeutrality ended. “Even if all payment processors couldafford to pay for 'fast lane' quality of service, these paymentswould force the industry to add new fees on all transactions tocover the costs of paying for access to the fast lane,” he wrote.“Such fees would make it very difficult to drive costs down in thepayments industry and will ultimately pass a greater burden alongto the consumer.”

Milne's concluding argument: “The proposal will negativelyimpact the market for payments processing by quelling innovationamong small businesses in all sectors. Indeed, as we drive down thecost for payments, we can serve more and more smaller businessesoffering low­ margin and low­ cost goods (both virtual and real)that have not yet had affordable payments options.”

Funds in a Dwolla account are held in a pooled account at the$2.5 billion Veridian Credit Union in Waterloo, Iowa.