Bringing Even More Simplification to the Payments Process | Dwolla | FF News at Money20/20 USA

Bringing even more simplification to the payments process.

At Money20/20 USA 2024, we spoke to Dave Glaser, CEO of Dwolla, who is at the heart of a shift taking place in the US. He points to a future where payments could “disappear” through biometric-linked transactions.

Glaser lets us know how their secure, cost-effective pay-by-bank and open banking solutions reduce the reliance on traditional methods and legacy systems. It’s an exciting example of Open Banking and Embedded finance in action. 

Modernizing Payments: Why the Challenge Persists

The main thing Dave highlights is the ongoing efforts to modernize payments stem from the ever-evolving nature of technology and consumer preferences. Drawing from his 25 years of experience in the industry, he described this as one of the most dynamic eras for payments innovation. Legacy companies that have been operating for decades are now actively upgrading their systems to align with modern expectations.

Real-time payments, a global theme, aim to deliver immediacy, reduce costs, and expand options for both businesses and consumers. In the U.S., the RTP model, FedNow, and Same-Day ACH are gaining traction, offering businesses multiple frameworks to experiment with. Dave predicts that within the next decade, faster payments will become ubiquitous, a standard expectation rather than a cutting-edge feature.

Challenges Faced by Clients

When discussing the hurdles faced by Dwolla’s diverse clientele, Dave pointed to the growing pains of digital transformation. For larger enterprises, the challenge often lies in moving away from outdated systems like mainframes and eliminating paper-based processes. These companies are seeking modern tools, such as APIs and open banking, to streamline operations. On the other hand, innovative startups are exploring futuristic payment methods, such as biometrics-linked transactions, which use palm or facial scans to link to digital wallets for instant bank payments.

Despite the challenges, Dave expressed optimism about the immense opportunities in making payments seamlessly integrate into the customer experience, effectively “disappearing” into the background.

Dwolla’s Approach to Solving These Challenges

Dwolla positions itself as a leader in open banking and pay-by-bank solutions, areas where the company has excelled for over 15 years. Dave emphasized Dwolla’s commitment to modernizing payment infrastructure while ensuring security, ease of use, and cost efficiency. By providing merchants with world-class tools for pay-by-bank capabilities, Dwolla enables businesses to reduce their reliance on traditional credit and debit card systems, leading to lower transaction costs and a streamlined user experience.

The Growth of Embedded Finance

Embedded finance is a rapidly growing trend, with companies like Uber and Airbnb setting the benchmark. Dave believes this concept of “invisible payments” will only grow, extending even to small businesses. He described a future where traditional payment methods—cash, card swipes, or taps—are replaced by advanced technologies like biometric scans, which will make the act of paying frictionless and intuitive.

Open Banking in the U.S.

Open banking has taken different paths globally. In Europe, regulatory mandates drove its adoption, creating a more competitive payments landscape and reducing costs for merchants. The U.S., however, has relied on its decades-old ACH system, which, while technically an open banking platform, suffers from legacy technology and outdated interfaces. Dave underscored the need to modernize this system to unlock its full potential.

Dwolla plays a pivotal role in this transformation by not only enabling seamless pay-by-bank solutions but also integrating fraud prevention and identity verification capabilities. This approach makes bank payments as simple and secure as card payments, paving the way for widespread adoption.

The Money20/20 Experience

Finally, Dave reflected on the value of Money20/20 as a hub for networking and collaboration. For him, the event is as much about rekindling long-standing relationships in the industry as it is about exploring new innovations and partnerships. The camaraderie and shared vision among attendees make it a fertile ground for shaping the future of payments.

Dave Glaser’s insights paint a picture of an industry in the midst of profound change. With innovations like real-time payments, open banking, and embedded finance at the forefront, the payments landscape is steadily transforming into one that prioritizes speed, efficiency, and simplicity for businesses and consumers alike. Through its solutions, Dwolla is well-positioned to lead this evolution, making payments as seamless as they are secure.