Dwolla is an e-commerce business allowing payments and to be made through the Internet.

A Dwolla account can be funded with electronic debits from a bank account or by receiving a money transfer from another Dwolla member. Funds in a Dwolla account can be withdrawn to a bank account or by sending a money transfer to another Dwolla member.

Dwolla is one of the methods available for adding funds to an account with some bitcoin exchanges. After irregularities were reported[1], some exchanges dropped Dwolla. Dwolla’s terms of service change in May, 2012 affected its use with Bitcoin.

Dwolla Corp, located in Des Moines, Iowa, is registered as a money transmitter in Iowa and provides accounts only to those who bank in the United States.



The fee for transferring money to another Dwolla member is a fixed $0.25 per transaction. The sender can choose to pay the fee or to have the fee deducted from the amount sent.

Money Transfer

Dwolla funds are transferred only to another Dwolla account. Dwolla allows a pending payment notice to be sent through Facebook and Twitter to notify a recipient who may or may not already be a Dwolla member, however for the recipient to claim the funds, the recipient must establish an account on Dwolla.


When available funds are transferred from one Dwolla account to another, the recipient has access to the funds immediately.

The process of adding funds can take from two to five business days. This is because Dwolla uses the Federal Reserve’s ACH network which incurs these delays.

If transfer is made where funds must first be drawn from the sender’s bank account, the transaction status will show as pending until the underlying funding transaction has completed.

Withdrawing funds from Dwolla to a bank account could complete the next business day however waiting two to three business days before the transaction completes is possible as well.

Dwolla has introduced a hybrid ACH service which eliminates the delay however only a very limited number of banks are using that service as of May, 2011.


For personal accounts there is a $5,000 per-transaction limit. Business accounts have a $10,000 per-transaction limit.

Payment Hub

A Dwolla Hub is an optional service that assists in requesting a payment. Once enabled, the account holder can request money from anyone simply by providing the address to the account holder’s hub page. For example, the founder of Dwolla has his own hub page.


ACH fraud can occur (e.g., stolen account used to make payments, account holder falsely disputes a transaction they had authorized, etc.) so there is the risk of ACH chargebacks. In some circumstances, an ACH chargeback can occur within 180 days of the transaction. No payment cards (neither credit card nor debit card) are used to fund Dwolla accounts, thus the relatively common payment card chargeback is not a factor for Dwolla transactions.

In July of 2011, Dwolla changed their terms of services[2] to include:

“The receiving party of a transaction may be subject to chargebacks occurring within the account if claims are made by the sending party or by the financial institution. In the event fraud occurs, funds may be reversed and arbitration will begin with both parties.”


Dwolla launched nationwide in the U.S. on December 1, 2010. They reached volume of $1MM per week in June, 2011 and then hit a level of $1 million per day just a month later.

On May 15, 2012 Dwolla’s Terms of Service was changed to prohibit the use of Dwolla involving “virtual currency” or with organizations regulated by FinCEN (e.g., money service businesses).

See Also on BitcoinWiki

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