Dwolla marks a change in the way we view digital currency

The Dwolla is the most interesting startup when it comes to changing the basics of digital currency. This Iowa based startup has come up with their own payment method as an alternative to credit cards and Automated Clearing House (ACH), which have been used for years to power bank transactions and other payment transactions with companies like Square.

Having created its own network has given Dwolla the upper hand over its competitors in two areas. They can avoid the interchange fees that are charged by credit card companies and they can also transfer instantaneously on the same day. Due to this, there isn’t any waiting period as it used to be with ACH. According to the reports of the company, they processed close to $1 billion in transactions this year.

According to Eric Weiss, an investor who backs companies like Braintree and Venmo, Dwolla is attempting to put an end to this system. The issue here is, if for some reason people have to move their money into the old system, the same transaction fees and wait hours would apply. Consumers should be able to transact and transfer funds only within the same Dwolla system. For that, the network needs to connect to all the merchants and other consumers to become valuable and exist entirely on its own. As of now, only PayPal has achieved success of that magnitude.

Last week, Dwolla gained major power after introducing the Dwolla credit card. These cards, backed by Comenity Capital Bank, are similar to the traditional Visa/Master cards but without the traditional 2 to 3% transaction fees. Rather, transactions under $10 are free and anything above that is charged flat 25 cents. Since Dwolla does business with both parties, consumers can apply for a line of credit. Upon approval, these cards are open to use instantaneously.