Dwolla adds security tools for ACH transfers

Dwolla and Plaid are collaborating to add protection to Automated Clearing House payments.

The partnership enables users to tokenize account and routing numbers and authenticate user bank accounts through Plaid, which offers technology that connects users to banks. Dwolla's SaaS platform will be the ACH provider and facilitate the movement of funds through its Access API.

The move is designed to reduce data exposure. "We're at an inflection point in the world of ACH payments," said Zach Perret, CEO and cofounder of Plaid, in an April 25 press release, adding the partnership will also simplify the experience for developers, who will be able to access data quickly for approvals.

Patrick T. Fallon/Bloomberg

Tokenization replaces consumer information with one-off substitute numbers that are unusable in other venues, considered a key move to boost digital payments, faster processing and enable a move away from static authentication.

"The strength of security in card networks is based on tokenization being table stakes, which we hope becomes more common throughout the industry," said Perret in the release.

Dwolla most recently has been focused on providing improved connections to banks to foster real-time processing and mobile commerce.

"The partnership demonstrates how fintech companies can come together to introduce easier and safer ways to access the nation’s banking infrastructure," said Ben Milne, CEO of Dwolla, in the press release.