Friday, November 11, 2011
Great Article. I like the cut of this guy's gib. Innovative is the operative word here. Innovative.
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There's a tiny 12-person startup churning out of Des Moines, Iowa.
Dwolla was founded by 28-year-old Ben Milne; it's an innovative online payment system that sidesteps credit cards completely.
Milne has no finance background yet his little operation is moving between $30 and $50 million per month; it's on track to move more than $350 million in the next year.
Unlike PayPal, Dwolla doesn't take a percentage of the transaction. It only asks for $0.25 whether it's moving $1 or $1,000.
We interviewed Milne about how he is building a credit card killer and Square rival from the middle of the nation where VCs and press are scarce.
BI: We hear you're making credit card companies angry. How are you doing that?
Ben Milne: Ultimately we're trying to build the next Visa, not the next PayPal. We're building a human network based on how we think the future of payments will work. The current model needs to be blown up.
Dwolla started out of my old company. I owned a speaker manufacturing company and we sold everything directly through a website. I got really obsessed with interchange fees and how not to pay them. Every time a merchant gets paid with a credit card they have to give up a percentage. In my case, I was losing $55,000 a year to credit card companies. I felt like they were stealing from me -- I was getting paid and somebody was taking money out of my pocket.
So I thought, how do I get paid through a website without paying credit card fees? We pitched a bank, and amazingly enough they said, "We'll give it a shot."
That was three years ago, so we've been working on the project for a really long time. In December of last year we figured out how to legally do what we do.