This 28-Year-Old Wants to Kill Credit Card Use
source: http://www.businessinsider.com/this-28-year-old-is-making-sure-credit-cards-wont-exist-in-th...
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- misfit20
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Dwolla was founded by 28-year-old Ben Milne; it's an innovative online payment system that sidesteps credit cards completely.
Milne has no finance background, yet his little operation is moving between $30 and $50 million per month; it's on track to move more than $350 million in the next year.
Unlike PayPal, Dwolla doesn't take a percentage of the transaction. It only asks for $0.25 whether it's moving $1 or $1,000.
We interviewed Milne about how he is building a credit card killer and Square rival from the middle of the nation where VCs and press are scarce.
BI: We hear you're making credit card companies angry. How are you doing that?
Ben Milne: Ultimately we're trying to build the next Visa, not the next PayPal. We're building a human network based on how we think the future of payments will work. The current model needs to be blown up.
Dwolla started out of my old company. I owned a speaker manufacturing company and we sold everything directly through a website. I got really obsessed with interchange fees and how not to pay them. Every time a merchant gets paid with a credit card they have to give up a percentage. In my case, I was losing $55,000 a year to credit card companies. I felt like they were stealing from me -- I was getting paid and somebody was taking money out of my pocket.
So I thought, how do I get paid through a website without paying credit card fees? We pitched a bank, and amazingly enough they said, "We'll give it a shot."
That was three years ago, so we've been working on the project for a really long time. In December of last year we figured out how to legally do what we do.
How many transactions are you doing?
The average transaction volume for Dwolla is right around $500 dollars. We move between $30 and $50 million per month.
What's your story?
I'm 28. I started my first company, Elemental Design, when I was 18. I dropped out of University of Northern Iowa and built that.
I started college because I thought that's where I was supposed to go. I applied to one college, I got in, went, and realized it wasn't for me. I had customers so I stopped going to class.
We grew that company from a $1,200 investment to over one million in revenue in four years with three or four people and without outside investment. The company was running itself and I wanted to work on another project.
You don't have a finance background and yet you built Dwolla?
It's been helpful in some strange ways. I think the first financial institution we went into only listened to me for entertainment. They let me get in to pitch the full executive team at the bank.
I don't look like a banker, they knew I didn't have a banking background. They actually agreed to work with Dwolla after two hours of arguing with me and me scribbling on a whiteboard about how the whole thing could work.
Had I been more typical, maybe they wouldn't have listened to me. In that respect, I think that not knowing how the mechanics worked was good — we just knew the way we wanted them to work.
What did you do for the first two years when Dwolla wasn't technically legal?
Well it was legal, we just couldn't operate outside of Iowa. For the first two years we built out the platform. We did a sh*tload of testing on a small scale because legally we couldn't launch Dwolla nationwide. We spent two years inside of Iowa fine-tuning Dwolla with the financial institutions, building out some of the initial models, and trying to figure out how to legally do what we do.
How'd you find a legal loophole?
Moving money is an exceptionally regulated business. We're in Iowa, which is sort of conservative — I don't know if that helped us or hurt us, but in the long term I think it helped us. We figured to do this legally, we had two options: we could take in a tremendous amount of money and go out and get licenses, which is how most people do it. But we didn't have access to that kind of capital here.
The other option was to bring in really strategic investors, which is what we did. One of our investors is a financial institution; one is a financial services company.
Read more: http://www.businessinsider.com/this-28-year-old-is-making-sure-credit-cards-wont...
http://www.businessinsider.com/this-28-year-old-is-making-sure-credit-cards-wont...
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- Community, Community Spotlight
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- Credit Cards, Paypal
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cabinettags
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I'm not going to even pretend to understand this. But I am going to say that it sounds good to me. I too have an online business - such as it is - and use PayPal to complete my transactions. While PayPal's cut is less than the banks I've talked to, none the less a percentage of what I make ends up in their pocket. And $0.25 per transaction is less than their minimum. Thinking I need to talk to this guy.
- 6 months ago
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cabinettags
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Ambill94
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Not sure I understand it much beyond a very basic concept, but it sounds like a great alternative to the bankster options...have to share this. Wish him well...wonder what happens when he moves his first billion...?
- 6 months ago
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Ambill94
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misfit20
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How long do you think it will take for the big corporations to come up with a "law" that makes this illegal? The mafia needs their "taste"
- 6 months ago
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misfit20
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dcrog
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misfit20:
Try as they may, but it does not appear that there would be any grounds to supress this enterprise since it is nothing but legal commercial activity. The only issue he faces is having transactions cross state lines, which would bring federal regulations into it, but, on the surface provided by the initial posting, I don't see a way to quash it. I've only worked in the financial sector for the last 20 years, so I'm no expert, but if I had cash to gamble with, I'd throw down with him for sure.
- 6 months ago
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dcrog
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danitassin
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Great great great! I love it. My husband and I don't use credit for anything. No credit cards, no car payment, no mortgage payment, no loans of any kind. If we don't have the money, we don't buy it. period.
Great idea and great post. I'll definitely spread this. - 6 months ago
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danitassin
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dcrog
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Great idea from a very visionary guy! That being said, the problem with credit cards is not their mere existence, it's their use by people who are not intelligent enough to understand that they can't over-extend themselves, and/or people who have no sense of responsibility, like Obama and the rest of the Marxists in our federal government, who's idea to create jobs is to over extend our national credit cards issued by the Bank of China!
- 6 months ago
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dcrog
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danitassin
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dcrog:
Absolutely. Living beyond our means, the American dream.
- 6 months ago
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danitassin
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RonenA
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dcrog:
Do you even know what Marxism is?
- 6 months ago
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RonenA
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dcrog
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RonenA:
Uh yup. Don't worry, I'm not insulted by your question. It's quite obvious that Obama and the the rest of the "progressive" wing of the democrat party are Neo-Marxists. We can play with titles all we want, but it really does not matter what it's called, it has the same smell.
- 6 months ago
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dcrog
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RonenA
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dcrog:
Obama wouldn't even be on the Left in the rest of the developed world, never mind Marxist. What has Obama done, or even said, to indicate that he agrees with Marx's theory of history. How has Obama indicated to you that he believes 1) economic crisis will bring upon the immiseration of the proletariat, 2) free the proletariat of their false consciousness, 3) bring upon the overthrowing of the bourgeoisie followed by 4) a proletariat government and 5) eventually, a classless communist society.
- 6 months ago
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RonenA
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dcrog
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RonenA:
Your opening thesis, and the subsequent tid bits you offer in support tells me that you do not believe that Obama is a closet communist, so there is no point in me standing in front of a fan to pee into it. I'm not one to waist time by explaining reality to those who do not see the light. :)
- 6 months ago
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dcrog
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hammywill
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dcrog:
Obama a Communist? I've never seen a Communist bail out private financial institutions and require a populous to purchase products from a private for profit corporation. I HAVE seen plenty of Fascists do this though. But my guess wold be that we may be dealing in semantic differences here.
- 6 months ago
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hammywill
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RonenA
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dcrog:
Correct me if I'm wrong, but you essentially just said: "I can tell you disagree with me, so I will not discuss the subject with you." This is a very bad way to live life, sir. If you only discuss your opinions with those that agree with you, you risk holding some dangerously wrong beliefs. If your opinions cannot hold up to scrutiny, perhaps you should not be holding them.
- 6 months ago
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RonenA
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dcrog
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RonenA:
Most certainly, you are wrong. My point was, as was clearly stated, I did not find the effort worth the expenditure to discuss with you the evidence that Obama and the rest of the "progressives" are Marxists, since you made it clear that you did not think they were. Since you did not agree with that presmise, there is no point in explaining things. As I said previously, it would be like pissing into a fan! Sometimes, there's no point to the exercise. It's like trying to talk someone out of their religious views, it 'aint gonna happen.
- 6 months ago
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dcrog
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dcrog
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hammywill:
Well certainly, you are correct. Obama has exhibited on numerous occasions now, his deep held reverence for both Communisim and Facism! His moves to prop up "gubment moters" to pay back his pals in the UAW, his moves to pick winners (his campaign donors) in the solar energy "industry", which have all went belly up, and his health scare scam all have been obvious illusrators of his Facist inclinations, while his often-repeated class warfare rhetoric and redistribution dreams are clear illustrators of his Communist faith. All of which are clear examples of Obama being an obvious dumbass, the worst kind of dumbass as well, the arrogant kind.
- 6 months ago
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dcrog
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wolfess
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dcrog:
being an obvious dumbass, the worst kind of dumbass as well, the arrogant kind.
Takes one to know one.Do some basic research on Solyndra and you will discover they started receiving government money from the shrub -- please, for Goddess' sake stop spouting your obvious LIES mixed in with comments like: it is against my scruples to match wits with an unarmed person. See, my remark even sounds smarter than your: "pissing into a fan" -- who says things like that when they want to appear as if they have a modicum of intelligence? But hey, you have a very Merry Christmas; me? I'm a witch so I celebrate the Winter Solstice, whom the 'christians' STOLE and renamed 'christmas.'
Pwr 2 the 99%! Dismember the 1% and their paid vermadon (trolls)!
- 6 months ago
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wolfess
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dcrog
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wolfess:
Yes it certainly does sweet Mistress Wolfess! I'm fully aware that the "shrub" started looking at Solyndra, but even W was smart enough to sniff out a scam, he pulled out and did not give money. On the other hand, your dear leader, feeling the need to pay back for all the campaign money, pissed right into the fan with our tax dollars given to Solyndra, and then when it was obvious they are going belly up, requested that they wait until after the election to report their problems. I realize your feelings and emotions are on your sleve, and it's so cute when you get your hot 'lil thong in a wad. :-*
Moving on, I'm fully aware of European history, and the origins of the Christmas tree in pagan havest rituals, and the efforts by the Catholic church as it spread througout western Europe during Roman occupation to "convert" the Pagans by adopting many of their traditions and rituals, including the tree.
Don't worry ma'am, I would not ever bother mathching wits with you, because it most certainly would be like the fan, and besides, I could care less and I certainly would not try to change your religion!
- 6 months ago
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dcrog
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dcrog
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dcrog:
Certainly a hot witch at that! Great hair!
- 6 months ago
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dcrog
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hammywill
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dcrog:
The UAW had to actually make concessions and take pay CUTS before any American auto manufacturer received bailout money. The only ones in that industry who profited from Government money were the executives. The UAW issue is a red herring and is telling as to how well you research the issues you espouse.
- 6 months ago
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hammywill
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dcrog
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hammywill:
"Average wages and benefits currently total about $69 an hour per GM worker". (as of 2008)
This was prior to the taxpayer funded bailout of GM. Yes, I'd say pay cuts were in order.
- 6 months ago
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dcrog
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hammywill
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dcrog:
No pay cuts for the Ford workers and that company seems to be doing great. The notion that workers wages was the reason those companies were in the red is only believed by those who don't do any research.
- 6 months ago
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hammywill
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dcrog
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hammywill:
Quite true, Ford did not take a bail-out either! GM's problem was at the management level, and easy concessions to the UAW over the years that finally popped.
- 6 months ago
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dcrog
