I have no problem with PayPal and find it to be extremely versatile for my needs.
But as the exchange rate continues to fall I'd like to explore ways to avoid raising prices. One of those ways is to find ways to spend less getting paid. Currently if I accept paypal I have to spend 3-4% (or more depending on the currency) and .30ct per transaction to get the money. Obviously $30-$40 on every $1000 I get adds up quickly. Not only that if I were to turn around and spend the $970 I jsut got from Bob by sending it to Bill then Bill in turn will pay 3-4% on that money and so one every time money moves within paypal's system. Frankly the rake is way too high for what is essentially an instant move of a few electronic bits. Yes I understand that PayPal has overhead and provides a service but they got to be a company making billions in profit off that rake. It won't take you long to do the math to see how fast PP gets ALL of that $1000 once it enters and starts moving through their system.
So I came across Dwolla. I signed up and we'll see how it goes but the kicker is that they charge no fee at all for transactions less than $10 and ONLY .25cts for transactions OVER $10. Now there MUST be a catch and I am sure I will find it.
So the fee reduction is huge. The immediate tradeoff is convenience. They don't take credit cards to fund the account, they don't offer debit cards to use outside of their system and withdraw from atms. If you want money out you have to send it to your bank account (like paypal as well if you don't use a debit card). And that takes anywhere from a few minutes to 2-4 days.
But from what I see the payment from person to person is just like PayPal with a few more additions in that you can pay to Facebook accounts as well as to email addresses.
So maybe some of you can check this out or tell me your experiences if you use it. I am going to try to encourage folks to use it so that we can have a viable alternative to PayPal. I like having choices and paypal has always been good to me but having a backup can't hurt.
www.dwolla.com
FAQ - http://help.dwolla.com/customer/portal/articles/87210-what-is-dwolla-and-how-does-it-work-
Edit: So I couldn't help it and did the math in a spreadsheet. at 3% and WITHOUT the .30ct fee it takes paypal 225 transactions to get that $1000 down to $1. Ready for this, WITH THE .30cts per transaction fee it takes them 154 transactions to get the $1000 down to .15cts.
At 3.5% for those of you who might think a half percent doesn't make much difference -
Put 1000 dollars into paypal and let it move from person to person and this is what happens:
After changing hands 10 times the money remaining is $723 so more than 25% of the original $1000 belongs to paypal. At 20 transactions 50% of the original 1000 is gone and now there is $504 that PP users can use to buy things. It takes 63 transactions to get to about $100 left of that thousand and 134 transaction to get it all the way down to .25cts left.
No wonder Elon Musk can build spaceships.
In contrast this is how much Dwolla takes out of that thousand in the same 134 transactions - $33.75 leaving $966.25 to spend. Assuming all the transactions were $10 or more - which would be impossible because 134x10 is 1340 but the point is well made that it's virtually impossible to SPEND more than $35 on fees before the $1000 is gone.
That's a bit much to swallow when you think about it.
But as the exchange rate continues to fall I'd like to explore ways to avoid raising prices. One of those ways is to find ways to spend less getting paid. Currently if I accept paypal I have to spend 3-4% (or more depending on the currency) and .30ct per transaction to get the money. Obviously $30-$40 on every $1000 I get adds up quickly. Not only that if I were to turn around and spend the $970 I jsut got from Bob by sending it to Bill then Bill in turn will pay 3-4% on that money and so one every time money moves within paypal's system. Frankly the rake is way too high for what is essentially an instant move of a few electronic bits. Yes I understand that PayPal has overhead and provides a service but they got to be a company making billions in profit off that rake. It won't take you long to do the math to see how fast PP gets ALL of that $1000 once it enters and starts moving through their system.
So I came across Dwolla. I signed up and we'll see how it goes but the kicker is that they charge no fee at all for transactions less than $10 and ONLY .25cts for transactions OVER $10. Now there MUST be a catch and I am sure I will find it.
So the fee reduction is huge. The immediate tradeoff is convenience. They don't take credit cards to fund the account, they don't offer debit cards to use outside of their system and withdraw from atms. If you want money out you have to send it to your bank account (like paypal as well if you don't use a debit card). And that takes anywhere from a few minutes to 2-4 days.
But from what I see the payment from person to person is just like PayPal with a few more additions in that you can pay to Facebook accounts as well as to email addresses.
So maybe some of you can check this out or tell me your experiences if you use it. I am going to try to encourage folks to use it so that we can have a viable alternative to PayPal. I like having choices and paypal has always been good to me but having a backup can't hurt.
www.dwolla.com
FAQ - http://help.dwolla.com/customer/portal/articles/87210-what-is-dwolla-and-how-does-it-work-
Edit: So I couldn't help it and did the math in a spreadsheet. at 3% and WITHOUT the .30ct fee it takes paypal 225 transactions to get that $1000 down to $1. Ready for this, WITH THE .30cts per transaction fee it takes them 154 transactions to get the $1000 down to .15cts.
At 3.5% for those of you who might think a half percent doesn't make much difference -
Put 1000 dollars into paypal and let it move from person to person and this is what happens:
After changing hands 10 times the money remaining is $723 so more than 25% of the original $1000 belongs to paypal. At 20 transactions 50% of the original 1000 is gone and now there is $504 that PP users can use to buy things. It takes 63 transactions to get to about $100 left of that thousand and 134 transaction to get it all the way down to .25cts left.
No wonder Elon Musk can build spaceships.
In contrast this is how much Dwolla takes out of that thousand in the same 134 transactions - $33.75 leaving $966.25 to spend. Assuming all the transactions were $10 or more - which would be impossible because 134x10 is 1340 but the point is well made that it's virtually impossible to SPEND more than $35 on fees before the $1000 is gone.
That's a bit much to swallow when you think about it.
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