Dwolla Credit launches beta with financial partner Alliance Data
Dwolla Credit users can find merchants that accept Dwolla's latest payment service through its new storefront.
Earlier this month Dwolla announced the launch of a private beta for its real-time payment system. Today the Des Moines startup opened the beta program for its new platform, Dwolla Credit, with Alliance Data Retail Services and subsidiary Comenity Capital Bank as its financial partner.
"Essentially, if you think about what we’ve done integrating the way cash moves online, it's really a foray into the same kind of thinking but with credit," Dwolla's director of communications Jordan Lampe told Silicon Prairie News Monday.
After more than a year of searching, Lampe says the startup found a financial partner that will help extend hundreds of millions of dollars to Dwolla's network through Alliance Data Retail Services, one of the nation's leading providers of branded credit card programs.
In terms of fees, Lampe says everything will remain exactly the same. Transactions less than $10 will remain free to Dwolla Credit users and those more than $10 will come with a 25 cent fee. "Being able to do something like this on the magnitude we’re doing it and at this price point has just never existed on credit before," Lampe said.
"Credit is not new, but providing it on a real-time network that avoids interchange fees, ditches plastic cards and positions credit to evolve is, and that’s what Dwolla Credit does,” Dwolla founder and CEO Ben Milne said in a press release. “Dwolla Credit places millions of dollars in immediate buying power right at the fingertips of network at a transaction cost that’s next to nothing and in a way that’s as simple as logging into your email."
Dwolla Credit will enable approved Dwolla users to make purchases instantly without worrying about available funds in their account or use of a credit card. Afterward, simply use your Dwolla account to make credit payments at a later date.
"Dwolla hadn't really looked at credit as off limits," Lampe (right) said. "We were inspired by the idea of cash and it's low-cost component. I can give you cash regardless of you having a credit card reader or merchant account. It's really democratic in that sense. We wanted to bring some of the same innovations to credit."
Dwolla hand-picked 40 "small- to medium-sized companies that have a great product, great story and great idea of service," Lampe said. From sites that sell retro videogames to companies like fiverr, these companies are currently the only ones using Dwolla Credit through the startup's newly launched lightweight directory called Storefront.
Earlier this year, Dwolla closed a $16.5 million Series C round led by Andreessen Horowitz, and during its initial private beta roll-out, select users have helped the startup develop its new Dwolla Credit program. According to a press release, Dwolla will continue enrolling beta users and merchants, with plans to offer general availability in early 2014.
Learn more about Dwolla Credit and how it can help merchants and consumers:
Credits: Photos and video courtesy of Dwolla.