According to Porters Five Forces, the online payment industry’s barrier to entry is very strong. In an industry that the government regulates attentively and that is mainly controlled by credit card companies, just thinking of joining the industry seems daunting;however to Ben Milne, the difficulties were just treated as challenges as he started his company. Starting his online payment company in the highly regulated and conservative state of Iowa, he fed on the restrictions and legal difficulties to fine craft Dwolla. What differentiates Dwolla and other online payment medium is the cut that Dwolla makes form each transaction; whereas most companies charge a percent fee per transaction, Dwolla simply charges $0.25 per transaction, no matter the size of transaction.
Currently they move close to $50 million dollars a month and forecasts show that they may move over $350 million in the next year. With the financial backing that they have acquired, there are multiple projects to incorporate Dwolla with major banks nationwide in the United States.
How did Dwolla grow so large in such short time?
Firstly the ease of the use of this method, being accessible through social media, has garnered the attention of private users.
Secondly the 25 cents charge per transaction attracted businesses. Since the transaction fee is much more advantageous compared to a % fee, which become very costly when dealing with large online transactions.