Why do I have this scummy feeling about Dwolla? Was it something I read? I have this feeling that they're going to evaporate as soon as sites start taking Dwolla payments and there's a reason for them to be targeted by criminals... will 25 cents per transaction really cover the fraud-prevention excellence they need to develop?
Dwolla did some questionable things with chargebacks last year [1,2], and you may have heard about that.
Unfortunately, it was apparently in reaction to scammers. The scam, I think, was to transfer money from your bank to Dwolla, move it from Dwolla to TradeHill, buy Bitcoins, slightly launder the Bitcoins by transferring them to yourself in another account (with Tradehill or Mt Gox), and sell them. You can do that all in a few hours, easily with thousands of dollars.
Then go to your bank and say that the Dwolla transaction was fraudulent. Dwolla gets stiffed by the bank, and has no recourse. So they started hitting TradeHill with chargebacks. I think they did it before their Terms and Conditions said that they could do chargebacks. (In fact, I think I remember reading somewhere that a feature of Dwolla vs. Paypal is that there would be no chargebacks.) Now, I believe their Terms say that they can do chargebacks.
You may also have heard about how some people's Dwolla accounts were vulnerable when they used the same user name and password on Dwolla as they did on Mt Gox. Mt Gox was hacked [3], and it was (supposedly) VERY easy for people to have their bank account cleaned out via Dwolla. Since people link their bank accounts to Dwolla, if a thief gets their Dwolla password, then the thief can simply transfer money from the bank to Dwolla, and then from Dwolla to a Bitcoin exchange (like Mt Gox). Then launder them as above, and you have yourself thousands of dollars.
I should note that it's likely possible for people to get their bank accounts emptied via PayPal as well (hence all the Paypal phishing attempts), but it's more difficult to launder Paypal credits, since you can't easily convert from a Paypal credit balance to cash like you can with Dwolla (thanks to Bitcoin).
But overall, I have a favorable opinion of Dwolla.
The Dwolla story is a great one - young, successful serial entrepreneur takes aim at a market dominated by just a few old school players (and I'd lump PayPal in as old school too) and in a few years is processing tens of millions of dollars.
The team is reinventing transaction processing.
Seems to me like a company that would appeal to the Hacker News community but whenever I bring it up, I get down voted. I don't understand why.
I really think this is the case of their website design not giving a feeling of quality... Their design is OK... but I bet if they could give the site a softer look and have it convey a feeling of assurance/reliability - they'ed have a much better product... I realize design is a small part of the equation, but it goes a long way in gaining trust in the brand... Right now their site gives me the feeling of "stodgy corporate", slightly sketch... they need to fix that... stripe in comparison gives me the feeling of "cool", "reliably", "smart"... i'm just one dude though... who has been regrettably using authorize.net - so take it with a grain of salt...
There's nothing wrong with Authorize.net. Well documented, easy to implement API, automatic billing or charge-by-reference, reliable service, not overpriced... Why would you regret it?
As my service has evolved and newer payment options have emerged braintree, stripe... I'm just probably jealous envious of the coolness of those services... but you're right - authorize.net has not yet failed - good point.
