Dwolla is out to beat Visa, and their business model of 25 cent transaction fees no matter the size of the transaction has the potential to do that for transactions over $10-20 by people who aren’t on credit. Paypal charges 30 cents plus 1-3% of a transactions. Merchants pay a similar rate when they accept Visa, MasterCard and Amex. If Dwolla catches on, they’ll take a huge, and well-deserved, bite out of the credit card companies and the banks who profit from them.
It sounds like Dwolla is starting out the way Paypal did — focusing on person-to-person transactions and moving into being web transactions, so it will be a while before their much cheaper model proves out. The other issue with Dwolla is that it doesn’t address the paying for a cup of coffee scenario, because a quarter in interchange is a huge percentage of small transactions. But you don’t need to use Dwolla or some other disruptive payment company for that — just pay cash. Every day after 11/5 (Bank Transfer Day) should be Fuck the Credit Card Company day, and the way you fuck them the best is by leaving that little piece of plastic in your pocket and pulling out a dead president.