P2P Foundation

DWOLLA (www.dwolla.com/) bills itself as a peer to peer payment platform which allows any user to exchange money with another user quickly, safely, at a lower cost. For now, the system is operational in the US only, and so far it covers, I believe, Iowa and California.

On the system’s blog, users are encouraged to vote to extend the service to their state.

The start-up payment company is rigorously linked to US dollars, no complementary currencies and no foreign currencies. It aims at tackling what they call the $48 billion elephant in the room: the swipe fee attached to all credit cards.

The interesting feature is that transfer fees on the Dwolla system are kept to an absolute minimum: a flat 25 cents per transfer, no matter how small or large it is.

Dwolla links to your bank account in a similar way as PayPal. It is primarily a money transfer tool. There is no need to keep a positive balance in a Dwolla account and it is possible to set the account to automatically transfer all incoming money into your standard bank account.

A video explaining the basic idea of the Dwolla system is on this page.

A series of videos on the Dwolla site explains the features of the system.

Dwolla’s relatively very simple user interface is explained in this video.

It will be interesting to see how fast they manage to grow and whether web based transfers will be able to make a dent in the billion-dollar credit card business.

Banks should have made such a system long ago, but it seems complexity is their preferred method of maintaining user dependence, in addition to making money on slow transfers.