Dwolla Adds Credit Feature To Improve Funds Access For Startup’s Users

Persuading consumers and merchants to shun the traditional way to pay and accept payment for goods and services using plastic remains Dwolla Corp.’s chief goal. But the company also is working to plug some holes in its service.

The Des Moines, Iowa-based startup on Dec.15 introduced an optional line-of-credit feature named Instant that gives users faster access to funds in their Dwolla account instead of having to wait two or three days for funds to arrive from an outside bank account. Such wait times have caused problems for users lacking the necessary funds in a Dwolla account to complete a purchase or person-to-person funds transfer.

Dwolla integrates with social networks Twitter and Facebook to enable users to send and receive funds from their social media pages. Users who buy products from merchants accepting Dwolla can share purchase and location information with their social networks.

Before Instant, Dwolla users could only transfer funds immediately to another user if they had a balance in their account. If users want to access additional funds, they would need to transfer them from a bank account linked to Dwolla. A transfer could take up to three days.

“The Instant product solves that availability-of-money issue,” Jeff Russell, president and CEO of The Members Group Financial Services, tells PaymentsSource. “It extends the functionality of the Dwolla platform by allowing for this instant availability to money. And from our perspective, it makes the platform much more valuable.”

The Members Group, a subsidiary of the Affiliates Management Co., distributes Dwolla’s product to credit unions. It also will underwrite the loans for Instant.

Instant is an opt-in feature available to all Dwolla users for $3 per month. Credit lines are available up to $500. The Members Group bases the amount on a user’s credit and Dwolla purchase history, Russell says.

Users will have 30 days to repay the loan without incurring an additional fee. Dwolla will charge users $5 every month they carry an Instant balance.

Russell credited user feedback for Instant’s creation.

“Dwolla has gone out from time to time to ask what can they do to make this better,” Russell says. “Overwhelming, the top thing was access to money faster because users don’t always keep large balances.”

New Dwolla users likely will experience a two-day delay for loan approval if The Members Group needs to approve the application manually, Russell says.

“As we gain more experience, we’ll automate more of it similar to the online credit card application process,” he says.

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