By Willy Staley  Mon Jun 18, 2012

Dwolla’s FiSync Goes Live at Veridian Credit Union, Liberating Users from Slow ACH Transfers

Astonishingly, the method by which your money moves between banks was developed while Richard Nixon was in office, and it hasn’t changed a tremendous amount since. The National Automated Clearing House Association was formed in 1974, and ACH transfers, along with their two- to five-day lag times, have been a way of life ever since. It’s an odd state of affairs in a world where you can, for instance, order and track the progress of a pizza on your computer, or create holograms of dead celebrities. It’s almost as if we use technology for all the wrong things.

That may change soon. On Friday, in Iowa of all places, Dwolla and Veridian Credit Union activated FiSync, the Des Moines-based company’s money transfer system.

On Dwolla’s blog on Friday, Jordan Lampe announced that FiSync Core was finally live, accessible to customers of Veridian Credit Union, a Waterloo, Iowa-based company, which started out as a credit union for employees of John Deere. Now it serves more than 160,000 customers, and has been a partner to Dwolla for a long time. And now, Veridian customers can move money instantly, using their Dwolla accounts.

“This isn’t a parlor trick, this isn’t a new ‘layer’ or ‘behavior’ that we’re adding the the payment stack. This is us returning to the simple idea that money moves from Point A to Point B,” writes Lampe. “We’re not hiding or floating money, these are real funds and real transactions.”

Unlike ACH, Dwolla’s FiSync doesn’t stop working on the weekends or major holidays, nor does it keep comically-short business hours like your bank. It works around the clock, seven days a week.

CEO Ben Milne elaborates further on FiSync’s goals, on the Dwolla blog:

I give you a dollar bill, and you know that dollar is worth 4 quarters, 10 dimes, 20 nickels or 100 pennies, but as Dwolla users, you know that when it comes to electronic transactions that is no longer the case. Since the 60s and 70s, new fees, costs, partnerships and structures have been built on top of what used to be a pretty simple idea, turning it into a confusing system that’s no longer recognizable. I swipe, you get paid 2-7 days later, the value of a dollar drops by ~2.75%, and $48 billion is lost.

Dwolla’s goal is, in part, to bring the simplicity of cash transactions to the electronic payments realm, and to make it more secure in the process. Milne ran an online business and lost tens of thousands of dollars to interchange and card-not-present fees, and this experience inspired him to find a way to make money more more smoothly, and more cheaply. (We spoke with Milne about this experience back in December.)

Dwolla offers FiSync to financial institutions for free. Dwolla collects a flat fee, from users, of $0.25 for each transaction over $10.

In February, Dwolla raised $5 million in Series B funding, led by Ashton Kutcher’s venture capital firm, A-Grade. The company is growing quickly — they’re currently hiring — and according to Lampe’s blog post, Dwolla is experiencing a great deal of demand for access to its FiSync API, meaning we can expect to see the product available at more financial institutions in the future.

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Add Your 2 Cents

  • jrwells5

    It is so sad that the US financial services industry still bemoans the
    lack of a real-time payments system. In 1997, Furash & Co.
    conducted a massive research effort for The Bankers’ Roundtable on the
    need for, definition of and potential architecture for, a “real time”
    payments system. Input was received from every area of the payments
    industry. Not surprisingly, most responses supported an “apparent” or
    “perceived” real time system in which payment would be guaranteed and
    risk eliminated immediately, but final settlement would occur in a batch
    mode. Essentially just tweaking the current system. But, there were
    those who advocated new electronic clearing mechanisms (primarily
    Internet-based) that would process all transactions in true “real
    time.” A new industry entity was created to pursue the discussion and
    potential implementation of an improved or new system — the Banking
    Industry Technology Secretariat or BITS. Obviously, the legacy system
    folks prevailed, and the industry continues to discuss
    disparate solutions to transferring fully-settled monetary value as
    swiftly as monetary information.