I mentioned Dwolla as an example of a payment service based on cheap ACH transfers. I’ve even used them to transfer between two of my own accounts at different banks, but it takes 2–3 business days for each leg of the transfer (to and from Dwolla). I once asked the BankSimple folks about their ACH strategy, and they told me that the biggest reason for the slowness is that ACH procedures are still rooted in an age when payment information was exchanged with magnetic tapes mailed around the country.
Tonight TechCrunch brings news that Dwolla is launching a service called FiSync that lets banks integrate them directly. The post doesn’t provide a lot of detail, but I’m guessing it means that the bank notifies Dwolla of the upcoming ACH payment directly and Dwolla can release the money based on this notification. If this is actually how it works, Dwolla would need to take some credit risk because the money may never show up.
I am certainly interested in the details of how clearing will work, but in any case this will make the Dwolla experience much smoother if they can convince enough banks to participate, and perhaps the US will finally have a cheap, widely available retail payment system that doesn’t rely on Visa or MasterCard.
Update: The blog post and press release are out now. It seems I was too optimistic. From what I can tell, FiSync only reduces the initial time it takes to register a bank account with Dwolla. When you add a bank account to your account, they make two small test deposits that you must then verify on the website. This process may be familiar from PayPal or other services that use ACH. The test deposits take 2 to 3 business days to complete, like most ACH deposits, and it is this wait that FiSync will eliminate by allowing the customer to instantly authorize Dwolla to link to the bank account. At least from what I can tell, regular ACH deposits and withdrawals will not be any faster, at least at this stage of FiSync.