In a move that Dwolla Corp. executives consider “a validation in the marketplace,” the Des Moines, Iowa-based mobile-payments startup plans to integrate its mobile-pay account with a credit union online-banking format.
Veridian Credit Union, also of Des Moines, announced Sept. 2 plans to offer its online-banking customers access to Dwolla through the same login starting in the first quarter of 2012. In doing so, Veridian customers with Dwolla accounts may transfer funds from one account to another and use Dwolla’s mobile-payment software to pay Dwolla merchants or to initiate person-to-person payments with any contact on their email or Twitter or Facebook social-network accounts, Brett Engstrom, Veridian manager of Web services, tells PaymentsSource.
The companies chose next year’s first quarter for the Dwolla launch because Veridian also plans to upgrade its online-banking format, Engstrom says.
The agreement marks the first time Dwolla will be fully integrated into an online-banking format. Its previous arrangements with other credit unions enabled customers to access Dwolla only through a Web link, Engstrom says.
Some 92,000 of the credit union’s 162,000 members throughout Iowa use Veridian’s online home-banking service, Engstrom says.
Customers with Veridian and Dwolla accounts may log in to both accounts with one password and complete a payment or funds transfer in a matter of seconds compared with the two or three days it now takes to verify funds availability, Engstrom says.
Dwolla CEO Ben Milne views the agreement as another step forward for his fast-growing company, which he says has built a base of 40,000 users and 2,000 to 3,000 merchants accepting Dwolla payments in just two years.
“This shows that financial institutions continue to work with us, and we hope that others decide that the time is right to implement this,” Milne tells PaymentsSource.
The online-banking setup will help Dwolla educate more potential customers about the ease of making mobile payments, particularly because they will have the same access to the accounts through their smartphones, Milne says.
Consumers with a Dwolla account and contact lists from Facebook or Twitter will be able to send a message to notify recipients of a payment into their Dwolla account at the same time the funds are being routed, Milne says.
“The nice thing about Facebook is that there is a photo attached to the contact, so it is better interaction and cuts down on the potential of sending money to the wrong place,” Milne adds.
Financial institutions may integrate Dwolla’s mobile-payment platform and choose how to present the format to customers, says Brian Day, the Dwolla product leader for The Members Group consulting firm in Des Moines.
“There is still work to be done on how it will actually look to [Veridian] customers, but it can be branded as the financial institution’s mobile-payment application powered by Dwolla, or it can be branded to educate customers more about Dwolla,” Day tells PaymentsSource.
The arrangement with Veridian represents an extension of Dwolla’s FiSynch software, which Dwolla first used with a credit union two months ago to more easily link a Dwolla account with the customer’s existing credit-union account, Day says (
Neither Engstrom nor Milne foresee any extra fees for credit-union customers, with Dwolla’s normal 25 cents per transaction rate staying in place.
“There may eventually be other services available tied into this that may call for extra fees, but our core service would not have a higher cost,” Milne says. “We are viewing this as an additional value to use with your current banking account.”
Dwolla recently announced it had grown its transaction base to $1 million per day (
The company also announced advancements with its Proxi software that uses a smartphone’s GPS technology to locate nearby merchants accepting Dwolla payments or fellow Dwolla consumers (
Having an online-banking format in place could help Dwolla grow more quickly, one industry analyst believes.
Combining online banking with an option for mobile payments is evolving, and small community banks or credit unions find it appealing because they can show customers they have a payments model in place similar those of bigger banks, Brian Riley, senior analyst with Needham, Mass.-based TowerGroup Inc., tells PaymentsSource.
“You get that model working well and then when it is time to acquire new clients, you have the roadmap to show them,” Riley says. “It’s an advantage when you have that proof of concept added to a roll out.”
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