The promise of faster payments doesn't carry much promise if a bank or business can't connect into rails that provide an instant money transfer service. Dwolla wants to solve the problem.
The Des Moines-based fintech has established a partnership with Cross River Bank that allows Dwolla access to the bank's connection to The Clearing House RTP rails to offer faster payments to business clients.
Integration through a Dwolla API now gives businesses access to the RTP network for instant bank transfers 24 hours a day, every day of the year through RTP-enabled banks.
"Instead of working on building it on their own, our business clients have made Dwolla their trusted partner to offer all of these solutions," said Adam Steenhard, senior director of corporate strategy at Dwolla.
Dwolla chose to work with Cross River Bank due to its experience with customers in the B2B space, but also because of its "fintech friendly and really tech savvy" reputation, Steenhard said.
The Clearing House established its RTP network two years ago as the first and so far only provider of real-time clearing and interbank settlement. As one of the first community banks to join the RTP network, Cross River says it provides the ability for fintech clients to send, clear and settle payments instantaneously via API with advanced messaging capabilities, while maintaining a strong focus on compliance.
“We are always working on ways to provide our partners with the most innovative and cutting-edge solutions to align with their needs,” Adam Goller, executive vice president and head of fintech banking at Fort Lee, N.J.-based Cross River, said in a release about the partnership. “The payments space is rapidly evolving to meet customer demands and instant transactions are the next wave. We are excited to power Dwolla’s new real-time payments offering, positioning us to lead the industry into the future.”
Dwolla is no stranger to The Clearing House, as both providers look to establish firmer footing with their payments offerings before the Federal Reserve launches its own instant settlement service with FedNow within the next two years.
"We've had a relationship with The Clearing House for some time, dating back to our work on faster payments planning with the Federal Reserve," Steenhard added. "They would be excited about how we can extend RTP to establish business relationships."
Though he couldn't disclose the identity of a global fintech partner that Dwolla is also working with, CEO Brady Harris said that provider is also fueling Dwolla's ambition and desire to become a major faster payments technology provider.
Harris views the potential of that partnership to be the impetus and "the backstory" for other faster payments advancements and developments in the future for Dwolla.
"This global fintech feels that RTP is going to become the primary payment modality, especially for B2B, in the next five years, as both cards and ACH as legacy systems start to migrate to RTP rails," Harris said.
In compiling a report on retail banking and payments fintech, Aite Group noted that it is important for a company like Dwolla to partner directly with financial institutions so that the FIs can white-label their API technology and offer expanded services to businesses.
"Dwolla also provides an opportunity, as a core provider, for FIs to connect to the RTP rails without building their own connections to the faster payments network," Talie Baker, senior analyst at Aite Group, said. "The Clearing House is interested not only in core providers enabling RTP, but also other third-party providers because it will help drive ubiquity of faster payments."
Larger banks on the RTP rails generally have RTP volume to send to smaller banks, but if they aren't enabled to accept that volume, consumers and businesses ultimately lose out on the benefits of faster payments, Baker said.
The partnership with Cross River Bank adds RTP to the Dwolla APIs that can be configured for payment account verification, customized transactions and payment notifications. The API also offers a digital wallet, user interface options, a dashboard to manage payments, PCI-DSS certified security, and access to a partner network that delivers integrations with Sift for fraud protection, Plaid for bank account verification, QuickBooks for accounting, and CurrencyCloud and TransferMate for cross-border payments.
"One exciting thing about RTP is it is starting to narrow the gap between card and ACH payments and starting to absorb some of the card volume of a business and expand the use cases for those on the ACH side of the business," Dwolla's Harris said.
"If you look at ACH, which is our core product and beachhead, on the peripheral ACH has many other services," Harris noted. "These different or premium modalities all have their connection back to ACH. The client can quickly toggle (on a dashboard) and choose between these different options."
Dwolla is working on streamlining the process even more, to eventually establish the dashboard to operate in a single-click mode to choose the payment option, much in the same way a consumer might do on an e-commerce checkout page.
"If a business wants to integrate with their bank for RTP, that could take six to nine months, or they could download one line of new code (as an existing client) or a single API from us to have full RTP in a matter of days," Harris added. "That's our value proposition, that we have taken our technology and created a connectivity layer to RTP, and we have done all of the work so the clients just have to integrate with our API — and they are off and running."
Dwolla has worked hard to establish footing in the payments industry, particularly the last couple of years, Aite's Baker said.
"The company has built a great culture and their API enables smaller businesses to provide payments capability without needing a ton of payments expertise and technical know-how," she added.
