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how dwolla works Archive - TransSwipe - Merchant Services and Credit Card Processing

TransSwipe - Merchant Services and Credit Card Processing

Archive for the ‘how dwolla works’ Category

Your brand, our payments platform

This blog post provides insights from our VP of Product, Brent Baker.

Over the past year we’ve made a strategic pivot, transitioning our focus away from a consumer application to a SaaS model designed for businesses who need to access the ACH network and incorporate bank transfers into their own application or service.

This is not a signal that there are major changes in service with dwolla.com. In fact, we continue to invest in this area (sneak-peek) and leverage the application as an operational showcase of our feature rich payments platform. Unlike market alternatives, the Dwolla solution allows businesses to send money to, receive money from, or transfer money between their customers.

Take for example our integration with GOAT, a two-sided marketplace for high-end sneakers.  GOAT had an existing solution for marketplace disbursements that fell short of merchant expectations. The supply side of their business (shoe sellers) grew increasingly unhappy with the existing process for receiving money from the shoes they sold. With our V2 API, GOAT was able to quickly integrate a seamless, white label payouts solution in under 10 days. Further, customer complaints from its sellers dropped 80%.

GOAT is only one example of what drives the direction of our product, simplify what was unnecessarily complex.

Looking back:

What’s possible with our API today was not possible a year ago. In the summer of 2015, we removed the already low per transaction fee. This allowed us to align revenue with what was truly providing value, a feature rich payments platform. Last fall, we introduced a new version of our API or what we refer to as V2. In addition to a simplified design, we moved away from a Dwolla branded experience, allowing partners to customize the end-user experience for their customers. It’s the Dwolla platform that drives the payment—it’s your brand that drives the experience.

Getting to this point required asking hard questions of our existing product and its position in the market. It also required that we take the next step as a maturing business and no longer apply the “start-up” label as a backstop to decision making. This strategic shift was about building a lasting business and we were fortunate to have a solid foundation to build upon.

Getting out of the way:

We believe that accessing the ACH network was unnecessarily complex. In addressing these complexities, we engaged with existing customers to truly understand the friction within the existing offering, understand where we fell short of expectations and get insight into what more was needed to compete in the market.

What we found was that in order to provide the ideal end-to-end experience, the payments aspect needed to move into the background and become a function of the service. As a part of this, we (Dwolla) needed to fade to the background.

This input and perspective shaped our Dwolla White Label service. Now our partners enjoy the benefits of branding their own payments experience, without needing to build it from the ground up (just making it look like they did).

Why? Empowering businesses to bring value:

By providing straightforward API documentation and dedicated developer support, businesses can go to market in as much or as little time as they desire—you set the pace and we’ll get you through the finish line.

It’s widely agreed upon that integrating a white label solution may prove easier and smarter than building your own version of a SaaS product. That holds especially true when dealing in payments. Building your own ACH solution calls for bank partnerships and an increased understanding of compliance.

We’ve spent the better half of the last decade boiling down a heavily regulated and complex payment process into a simple-to-use API, one that you can get started with immediately. If you don’t have time to reinvent the wheel, focus all your energy on breaking new ground in the finance / property management / e-commerce industry. We’ll help you manage the payment process in the background.

We are never done:

This past year’s pivot has brought a great deal of change for Dwolla—change for any organization is hard and we are fortunate to have the team and culture that does not shy away from big challenges. As we move forward, our team will deliver new functionality (rather than shiny new features) to continue to drive the value of a full-stack payment solution.

Get started with your own integration

We’ll help you design your ideal payments experience.


Thank you

A Dwolla representative will reach out to you within one business day.


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Common ACH return codes and why ACH payments go bad

There are complexities  with every payments system—for ACH payments, return codes are one of those potentially complex items. In this post we’ll explore some reasons for why an ACH payment may go bad and then tell you what you can do about it.

First, the basics. If you’re brand new to dealing with ACH payments, here’s a quick overview. ACH stands for the Automated Clearing House—it’s an electronic network allowing banks and their customers to send funds between one another in the US. Think about when you pay a bill online using your bank account, here your payment is being processed using ACH.

For more explanation, check out ACH for beginners.

Common ACH Reject Codes

There are hundreds of ACH return codes, but some common codes are R01, R02, R03, R04, R10, and R20. We’ll explain those below, but head here for a full list of the possible ACH return codes in the system.

R01 –  Insufficient funds
The available and/or cash reserve balance is not sufficient to cover the dollar value of the debit entry. Basically, there were insufficient funds to complete a debit transaction.

R02 – Account closed
A previously active account has been closed by action of the customer or the RDFI. In other words, the bank account is closed, and this transaction should not be re-submitted.

R03 –  No account or unable to locate account
The account number structure is valid and it passes the C heck digit validation, but the account number does not correspond to the individual identified in the entry, or the account number designated is not an existing account.

Essentially, the routing or account number got fudged or mistyped, therefore it couldn’t be used. This is a simple, yet common mistake—on the bright side it’s easily avoidable (see tips for avoiding return codes below).

R04 – Invalid account number
The account number structure is not valid. The entry may fail the Check digit validation or may contain an incorrect number of digits. This means that the account number entered is definitely not valid, for instance your customer may have entered only half of the digits needed for a routing number.

R10 – Customer advises unauthorized, improper, ineligible, or part of an incomplete transaction
The financial institution has been notified by the receiver (ie. customer) that the entry is unauthorized, improper or ineligible. Someone has contacted their bank and taken action to stop the transaction.

R20 – Non-transaction account
The ACH entry destined for a non-transaction account, for example an account against which transactions are prohibited or limited. Basically, the bank account entered can’t be used for ACH transactions.

Tips for avoiding return codes

Now that you have a grasp of some of the reasons ACH transactions can go bad, here are quick and easy tips to avoid receiving ACH return codes.

  • Ensure that your customer’s or user’s  routing and account number is entered correctly before confirming entry. It’s easy to miss a digit or type something incorrectly when you’re hurrying to pay a bill, so it’s critical they slow down and pay attention to detail.
  • If a prepaid checking account involved, make sure this bank allows for receiving ACH credits and debits. Per the R20 code, not all accounts can be used for ACH transactions, so it’d be beneficial to confirm this isn’t the case.
  • Ensure you or your customer’s funds have cleared the respective bank account and are available to before using those funds to make subsequent transactions to another party.

If you receive a return code, contact your bank to find out why they issued a return and what you can do to remedy the situation.

Dwolla, for better ACH payments

Dwolla is here every step of the way to get you up and running with ACH payments. Whether you’re a developer, product manager, or someone with very little tech know-how, we can help you understand when and where to build ACH into your payments process.

If you’re dealing with several of ACH return codes, check out Dwolla’s Instant Bank Account Verification process (IAV)—great for platforms. Just reach out below to learn more!

Learn more about ACH for business

Reach out to one of our specialists for how you can tap the ACH network.


Thank you

A Dwolla representative will reach out to you within one business day.


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Who can use Dwolla? Where?

Posted in Blog, how dwolla works, Infographic, New Stuff, who can use Dwolla on October 18th, 2012

To make a complicated thing simple is a great challenge.

One question that commonly comes up is, “Who can use Dwolla?” The honest answer is anyone who has money, and who is in the United States (for the moment).

The network can connect to everything, and part of our mission is to connect to anything connected to the internet. It’s a pretty powerful tool!

Please, as always, keep the questions and comments flowing. Feedback is good. Every once in a while we will keep popping up with pretty images thanks to Brandon ;)

©2018 TransSwipe


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