Author Topic: An alternative payment system - discussion (Read 250 times)

David Houck · « **on:** November 14, 2011, 05:37:19 PM »

I'm posting this here rather than the Misc. section because my subject might be of particular interest to those of our members who are considering buying and/or selling instruments or gear. And some of you may already be familiar with it and can share your experiences with the rest of us.

Today I ran across something called Dwolla. Dwolla appears to be an online payment system somewhat similar to PayPal, but without the fees that PayPal collects. Dwolla is cash based; and the only fee is twenty five cents per transaction.

The Dwolla site is here.
A short wikipedia entry is here.
An interview at Business Insider with the founder is here.

My guess is that this, at the moment, is just US based, as you would have to have a US bank or credit union account.

I have not signed up, yet; but from what I've read, it looks promising. By taking credit cards out of the system, it takes out the fees associated with credit cards. PayPal's fees assume credit card transactions; thus if you're selling an instrument worth a couple thousand dollars through PayPal there will be a significant fee. But with Dwolla the fee would only be $0.25.

So, what do you guys think? I've read through the links above, but I'm thinking some discussion here might be helpful.

hydrargyrum · « **Reply #1 on:** November 15, 2011, 06:56:30 AM »

Personally I'd love to have an alternative to Paypal. I've been disgusted with their collaboration with ebay for years now. It seems like both of those sites get by because they are well known, despite the fact they provide their services for a ridiculous fee. I'd love to see a viable competitor.

tubeperson · « **Reply #2 on:** November 15, 2011, 07:20:27 AM »

I believe ebay owns paypal. Not the most clear separation of church and state.

billostech · « **Reply #3 on:** November 15, 2011, 07:21:16 AM »

I may give them a try with my next sale/purchase.

bsee · « **Reply #4 on:** November 15, 2011, 08:07:10 AM »

I haven't looked at the new site yet.

The biggest problem I have with PayPal is that they have some had and fast rules in place that favor scammers. They force you to use particular shipping methods and then still allow a finding against you. You have to force a buyer to pay for full insurance and tracking if you want any protection against a non-delivery claim. Any international transaction is nearly impossible to do securely.

Buyers and sellers should be able to agree on terms and then be held to them. There should be the option for a buyer to accept responsibility for non-delivery to avoid paying extra shipping charges for tracking, insurance, and possibly the service upgrades required to activate those features. There should also be a crystal clear, step-by-step set of recommendations for shipping alternatives that, if followed, provide absolute protection against chargebacks.

bluplirst · « **Reply #5 on:** November 15, 2011, 01:47:59 PM »

Yeah, Paypal is a neccesary evil and I'm not a fan. Unfortunately, if you want to make a living buying and selling, Ebay is the best exposure you can get and paypal is the only option there.

When paying with paypal I always use my credit card, because paypal will never take your side LOL!

bsee · « **Reply #6 on:** November 15, 2011, 04:54:10 PM »

Paypal is way worse at screwing sellers than buyers, especially since the credit card companies back buyers. I generally feel safe buying, but selling requires the highest level of tracking and insurance for packages so that you are self-protected.

edwin · « **Reply #7 on:** November 18, 2011, 11:02:23 AM »

I've recently been hassled by PayPal. It turns out that as a seller, if you do not have 25 sales transactions in the last 12 months, they hold up your funds until 3 or 4 days after the item arrives. This means they get to use your money for a week or two. I got caught off guard, thinking I wouldn't ship until the funds cleared and my customer send me a polite but firm message wondering why I was waiting so long to ship. After 4 more days of trying to figure out what was going on, I could have easily earned a negative rating due to delays. Luckily, he was a nice guy and understood my confusion. To add insult to injury, they took a huge chunk out of my sale price. I sent in a complaint, but never got a response. I'd love to leave PayPal in the dust.

David Houck · « **Reply #8 on:** November 18, 2011, 06:32:48 PM »

25 sales in the last 12 months? I haven't used paypal for a sale in quite a while; I would have been surprised too.

David Houck · « **Reply #9 on:** December 13, 2011, 03:54:48 PM »

I thought I would post an update on this since some of you found it of interest. I opened an account and sent some money to a friend of mine. Our transaction was completed successfully, though we did have a glitch.

First; when you open an account, Dwolla has to verify your bank account; and that can take two or three business days.

Second; both parties will need to have Dwolla accounts. So if you wish to use this for a sale or purchase, there will be some additional waiting time if both parties don't already have their accounts setup and their bank accounts verified.

The Dwolla site says that you can send someone money by entering their email address. That's where our glitch came in. I sent the money to her email address, but she set her account up under a different email address. But she contacted their customer support who advised her to suspend the initial account and open a new account with the email address the money was sent to. So it seems to me to be the best thing that both parties have their accounts set up in advance and make sure everything is right.

But it works. If your accounts are already set up then it's faster than mailing a check and waiting for it to clear. And it's much less expensive than paypal or credit cards.

If you're working with someone you know, like a fellow club member, this seems to be a very good method of transferring cash.

I don't know what their dispute resolution process is like; so I don't know how useful it would be for dealing with someone you don't know.

Since I initially started this thread, Dwolla has announced that transactions under $10 are free. So this could be very useful for selling things like mp3s of your recordings.

Interesting stuff.

David Houck · « **Reply #10 on:** January 19, 2012, 08:30:17 AM »

For those who found this to be something to keep an eye on, CNN has a video up on Dwolla.

collyman · « **Reply #11 on:** January 22, 2012, 04:26:25 PM »

Dave, did you sell your fretless?

David Houck · « **Reply #12 on:** January 23, 2012, 06:39:07 AM »

Hi Mike; yes, it shipped last week.

wfmandmusic · « **Reply #13 on:** January 24, 2012, 05:15:10 PM »

I spoke to a guy a few months ago who said that Dwolla is the best way to go. He uses it all the time for selling and buying stuff. He said he has turned many people on to it and it's great.