Whether it is baseball cards, antiques or Hollywood memorabilia, the buying and selling of collectibles has hit its stride during the COVID-19 pandemic. And a website and application offering to organize such a process needs a payments provider to make it all happen.
New York-based Rally, an investment platform for buying and selling equity shares in collectible assets, turned to fintech Dwolla, a pioneer in both the mobile and faster payments space, to handle bids and payments for shares of nostalgic collectible items.
"People sheltering from COVID-19 have spent more time going through belongings, or clearing out parents' attics to find some hidden treasures possibly worth selling," said Rally chief product officer Rob Petrozzo. "We wanted a system that would give young, savvy investors the peace of mind that payments will occur quickly and any problems are addressed immediately when working through Rally."
Dwolla would never have been equipped to serve this task a decade ago, when it was primarily focused on being a mobile wallet. The company has made many changes to its approach in the intervening years, with its latest efforts taking it deeper into real-time payments development through partner integrations and advancement of its ACH-alternative platform.
This made it a fit for Rally's needs, with Dwolla becoming the first third party implemented on the site and app.
"Everybody expects the ability to create an account, deposit funds and make investments all in one sitting, and that is the experience we want to continue to provide," Petrozzo said.
"All of the cash transactions that run through the initial offering phase runs through Dwolla for us," he added. "Our users expect everything to be instantaneous and Dwolla has helped us with that. When someone makes a deposit, if a discrepancy in their name occurs during the KYC process, Dwolla helps us resolve that process as well."
It's a sample of what Dwolla has been after in recent years — and the Des Moines-based fintech says it has landed a major RTP partnership it will reveal in the coming weeks, bringing more faster payments capabilities to the U.S. market through Dwolla technology.
"I did some recent research on Dwolla and am pretty impressed, because five years ago I could not really determine what the company was trying to do, it lacked a sense of direction," said Talie Baker, senior analyst at Aite Group.
"Now, I think there is a real opportunity for them to work with smaller banks and businesses and, though it may not be their target market, to also work with a small community bank or credit union and their business customers," Baker said.
Because those types of financial institutions haven't built APIs to facilitate faster payments and other services, and it would be a way for Dwolla to make these services available to their customers, Baker noted.
"I know they had been down this path a few years ago and backed off because it was hard to get banks to move the needle," she added. "But now, this is a huge opportunity for Dwolla."
Dwolla has worked with the Federal Reserve and payments providers like The Clearing House, ACI Worldwide, Linked2pay, Visa and Mastercard in formulating what a real-time payments network would look like for banks, businesses and consumers in the U.S.
"A lot of people are indicating they will use real-time and instant payments, but there are big differences in what that technology actually means, depending on the fintech that is offering that to businesses," said
Dwolla provides banks and businesses with what it considers an easy route to real-time payments through a single API channel, connecting with RTP providers and making use of ACH same-day services that cost less than typical card payments.
"We are building RTP in a way in which we have found it more so aligns with the previous experiences and expectations of payment cards," Harris said. "But it can have the cost-saving components of ACH, where it is pennies on the dollar versus cards."
Late last year,
"We have found RTP to be a moniker and would not consider it truly instant payments because there are some lag features or deposit terms or restrictions that make it close to next-day or same-day ACH transactions," Harris said. "We are doing creative stuff in terms of prefunding accounts and lines of credit where we can actually truly get instant payments within minutes on weekends and holidays, and those are some differentiations we want to [get] in the market in the next few months."
The wheels of faster payments development continue to churn, with the integration of Early Warning's
Dwolla sees itself solidly entrenched in those technology circles, also looking to help banks and businesses move beyond the grinding wheels of legacy equipment and processes.
"You can see that Dwolla is certainly not only working on ACH, but also on real-time payments solutions," said Sarah Grotta, director of debit card advisory for Boston-based Mercator Advisory Group. "If you look at the work that the Federal Reserve did several years ago to convene the Faster Payments Task Force, you will find that Dwolla played an active role in those efforts to define what real-time payments means to the U.S. market."
With that sort of background, Dwolla has been able to help financial institutions in various ways, particularly the smaller and midsize banks in guiding them through a faster payments roadmap, Grotta noted.
"Dwolla can help institutions integrate to The Clearing House RTP network, which is a relatively complex project that touches nearly every aspect of a bank's or credit union's infrastructure," she added.
Dwolla brings what it considers significant ledger capabilities to the table, making it easier for its technology to focus on unique business cases customers may present. Those include opportunities for data sharing alongside ACH payments, or tying a system into a mass distribution setup.
"We don't want to become a PayPal or Marqeta or Stripe or Square," Dwolla's Harris said. "We want to dive very deep on our technology and our ACH and all of the appendages on the peripheral of ACH. That's exciting to us."
The concept of integrating RTP into the existing platform at a cost close to that of ACH will be a key factor. "It will differentiate us in the market when it hits in a few weeks," Harris said.
As a testament to the company's flexibility, it can also help collectors buy and sell those precious baseball cards or "The Three Stooges" memorabilia.
"We have done so much to make the payments part of our app a seamless experience, and a key part of our business," Rally's Petrozzo said. "Dwolla is showing that the pipes behind it are way more important."
