Q: I'm looking for an alternative to PayPal for sending money over the Internet. Is there a way to avoid the outrageous fees that often accompany transactions?
Using Dwolla, you can send money to people via Twitter, Facebook or a handful of other social media sites. Currently, Dwolla operates as a web-based service -- so anybody with an Internet connection can sign up through the site -- with applications available for iPhones and all Android-based phones.
When you make a transaction through the service, the sender of the money pays a $0.25 transfer fee (this can be paid by the receiver if they agree to it). If the fee is recurring (such as a monthly utility payment that you make to your roommate using the service), then the fee is waived.
After raising more than a million dollars from venture capital groups, Dwolla is considered a serious player in online transactions. The low fees could help it to become more popular among young, Internet savvy types than old stalwarts like PayPal. I can't see a downside to using the service as it exists: Should it fail, all money held in Dwolla accounts is insured by the FDIC and the National Credit Union Administration.
In a profile of Dwolla by the Associated Press, a couple of different individuals raved about how much they are able to save by using it. Nick Kremer, the president of a website design and hosting company sells $5,000 computer servers to new customers using Dwolla. Instead of paying a $150 credit card fee, he pays $0.25. Brad Bacheir pays his hair stylist through a Facebook account using Dwolla to avoid the processing fees charged by credit card swiping machines.
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