SMB Tech: Dwolla Thinks Paper Checks Should Go the Way of the Dodo

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    Many consumers today already believe that paper checks are a thing of the past; however, many small to midsize businesses (SMBs) still use the antiquated system to make their own payments and transfers with other businesses via banks.

    A survey from the Dwolla payment network involving 700 SMBs found that 66 percent of respondents in the U.S. spend $858 each per year on supplies, labor and money transfer times while using paper checks. In a post in Finextra, Dwolla Vice President of Marketing, Anne Driscoll, puts that data into perspective:

    “Small businesses are writing a $13 billion check each year for a paper-based process that does nothing but hurt their bottom-line and, arguably, keep the United States Postal Service afloat. Issuing paper checks is an old and manual process that clouds a business’s ability to make real-time decisions and get paid faster, but existing platforms have been too expensive and complicated to set up and integrate for the small or non-tech businesses.”

    Dwolla provides a way for SMBs to bypass the paper trail and move further into the digital age with its Business Payments Toolkit. The kit helps businesses convert operations to a digital-check payment system. Dwolla’s Next Day Transfers system helps set up bank transfers in as few as two business days, which will help small businesses to further reduce costs, if they use “approved, trusted parties.” Jordan Lampe, another Dwolla spokesperson, explained in an interview with

    “For all members, it has a potential to cut wait times in half for bank transfers and provide three-times-faster withdrawals and deposits for those trusted parties that get next day deposits.”

    All funds processed through Dwolla go through the automated clearinghouse (ACH) system, which is the primary way electronic funds are transferred via U.S. agencies and businesses. According to BizReport, Ben Milne, CEO of Dwolla, says the company helps SMBs and regular consumers to better take advantage of the system’s rapid transfer abilities:

    “The automated clearing house (ACH) plays a critical role in processing tens of trillions of dollars to settle payments made via checks, debit cards, and even credit card payments, but it’s often seen as slower than alternatives and harder for SMBs and consumers to use daily. Dwolla helps anyone tap into ACH’s strengths, like ubiquity and low-cost, while providing easy-to-use tools, the same next day speed the biggest businesses get access to, and new security measures, like tokenization, to help modernize ACH.”

    Currently, Dwolla provides an inexpensive way for anyone to make a money transaction online for only $.25. It has moved into the business realm with a network of businesses that accept its payments on their storefronts. The company hopes to now help many of those SMBs and others save money and curb paper usage via its simple, digital payment platform.

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