This 28-Year-Old's Startup Is Moving $350 Million And Wants To Completely Kill Credit C... - 0 views
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Banksters PayPal Square Credit-Card-Payment-Industry Dwolla Ben-Milne
shared by Gary Edwards on 15 Nov 11
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The biggest difference between ideas like this and a PayPal — and PayPal is a phenomenal idea, Square is too — is that those are built on top of networks like Visa and MasterCard. We're building our own
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Gary Edwards on 15 Nov 11Fascinating plan for totally disrupting the Banksters Credit Card Golden Goose industry. Good explanation of how things work, and how Dwolla will disrupt things. PayPal and Square are based on existing credit card transaction processing system. They make their money adding on to the basic credit card charge. Dwolla replaces the credit card processing system with a bank direct model. Here's the thing: Credit Cards charge sellers 3% of the transaction. Dwolla charges a transaction fee of $0.25. Yes, 25 Cents.
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All banks are connected by one ACH system. Credit card companies utilize that same system to pay off your credit card charges. Banks internally set along that same system to move money in their own banks. This system in its own right is riddled with flaws — tons of fraud issues and waste and delays. If you've ever had a payment take a few days to clear, its because they're waiting on that ACH system. We want to fix that system between the banks, take out the delays and make it instant. If we can create this ubiquitous cash layer of distribution between consumers and merchants and developers and financial institutions, that actually fixes the problem.
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We don't believe in credit cards. We believe in authorization and in lower cost transfers. Our generation actually understands that when you buy sh*t, it comes out of your bank account and you have to pay for that.
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Incredible interview with Ben Milne of Dwolla, the PayPal and Square killer that promises to take a huge chunk out of the Credit Card transaction industry. Incredible must read! This is page 2 out of four. Starts at: http://bit.ly/vzVUy3 excerpt: How does Dwolla work and how is it different from PayPal? With Dwolla, payments are made directly from your bank account. No credit or debit cards are allowed. And because they don't exist in the system, we don't have to bring the fees into the system. You can spend any amount of money and when you do that, the person on the other end doesn't have to pay 1, 2, 3 or 4%. They only pay $0.25 a transaction, which is especially helpful when it's $1,000, $2,000 or $5,000 transactions. Obviously PayPal becomes very cost prohibitive with those larger transactions. The biggest difference between ideas like this and a PayPal - and PayPal is a phenomenal idea, Square is too - is that those are built on top of networks like Visa and MasterCard. We're building our own.