EXCLUSIVE: “Once Upon a Real Time in America” – Dave Glaser, Dwolla in ‘The Paytech Magazine’

Dave Glaser, from pay-by-bank platform Dwolla, believes real-time payment infrastructure in the US is more than capable of improving merchant and consumer payment experiences

For the country that gave the world PayPal, Google Wallet and Apple Pay, the US domestic payment system can seem, well, a little Jurassic to an outsider.

Payment dinosaurs, like cheques (US: checks) while not prolific, aren’t extinct either. And UK visitors are often a little unnerved when a waiter takes your plastic and disappears with it to process the payment.

That said, things are changing fast.

Handheld devices are becoming more popular in diners; 28 per cent of Americans made a contactless payment instore last year (according to McKinsey); and A2A, real-time payments and open banking are accelerating in use (albeit from a very small base). Dave Glaser, CEO of the pay-by-bank platform Dwolla, would argue that the US was kind of ahead of the curve on that last one.

“We’ve had an open banking platform for the last 50 years. It’s called the ACH (Automated Clearing House) system,” he says.

The US has two ACH operators: The Clearing House, privately owned by the major banks, and the Federal Reserve’s ACH also known as FedACH.

It created an infrastructure that could, in theory, share customer data between every bank and credit union as well as third-party payments operators. The trouble was that by the time banks, merchants and consumers caught up with the idea of open banking, the system itself had become legacy. Dwolla entered the market 15 years ago as one of the earliest champions of A2A payments.

It could see a future where payments become truly frictionless through pay-by-bank and open banking solutions for merchants and businesses. Since then, the market has become a lot more crowded and the technology race a lot more heated. In 2017, The Clearing House launched what it simply called the RTP (Real Time Payments) – a true instant payment network for its member banks. That was joined in 2023 by FedNow from the Federal Reserve, an alternative rail for all US financial institutions to provide real-time payments and settlements for customers. More than 1,000 of them have signed up so far.

The pace of change

Real-time payment volumes are growing, with the RTP network surpassing one billion payments in the 18 months leading up to 2025, doubling in volume over that period. The competition posed by FedNow appears to have given it a healthy boost. Meanwhile, Visa will launch a near real-time, A2A transfer service, Visa Direct, in April 2025, promising speeds of sub-one minute for retail customers and business users, including cross border.

The credit card-dominated payments landscape of the US means users are even more likely to adopt a service from such a recognisable incumbent.

“There’s so much modernisation happening with companies that have been around for decades,” says Glaser. “They are finally upgrading and modernising their payments platforms. Merchants and businesses are leveraging RTP, FedNow and even the same-day ACH model and experimenting a lot right now.

“Our larger customers are all digitally transforming and thinking about moving processing and systems off mainframe computers, eliminating paper checks and manual processes, and taking advantage of today’s tools, like APIs and open banking. The opportunity is for players like Dwolla to help make that open banking system feel modern. In addition to processing payments, we’re bringing in identity and fraud solutions to make pay-by-bank as simple as swiping a card.”

A significant difference between the open banking environment in the US and Europe is that, in the latter, changes are driven by regulatory pressure, while in America it’s been largely dictated by the market itself.

“We’re trying to create an even playing field from monopolistic or duopolistic payment methods out there, making it easier for merchants to enjoy lower costs by taking advantage of the banking systems already in place”

“The regulatory-driven system mandates standardised APIs and data-sharing protocols, compelling banks to participate,” says Glaser. This has typically led to faster adoption and a level playing field for third-party innovators, but Glaser points out that it can also stifle
innovation if regulations are overly prescriptive, while initial costs imposed on banks are significant.

On the other hand, he says: “A market-driven approach relies on a voluntary collaboration between banks and third parties. This can foster more organic, tailored innovation, but progress is often slower and less consistent due to varying priorities and technical standards. A market-led approach can also lead to fragmented solutions and potential security vulnerabilities if not carefully managed.”

So would open banking have arrived in the US quicker had government been driving it? Well, there are some barriers that would have presented obvious problems regardless, explains Glaser.

“The absence of a unified regulatory framework has demonstrably hindered progress,” he says. “But while a top-down approach could have fostered faster standardisation and interoperability, the complexity of the US financial system suggests that a direct replication of other regulatory frameworks may not have been the most effective strategy.”

It’s an interesting, but largely academic question, since Dwolla works with what it’s got.

“We’re trying to create an even playing field from the monopolistic or duopolistic payment methods out there, making it easier for merchants to enjoy lower costs by taking advantage of the banking systems already in place,” says Glaser.

There are problems with that, though, that still need to be resolved. One of the biggest with A2A payment methods is a subpar customer experience.

“Cumbersome user journeys with multiple redirects and authentication steps can create friction compared to familiar card payments. Streamlining these processes is essential,” adds Glaser. But with new technologies working in tandem, he’s confident solutions can be found.

“When combined with biometrics and open banking, A2A payments have the potential to create a truly frictionless payment experience. A fingerprint or facial recognition, for example, can be integrated into the A2A flow, replacing passwords or card details, instead authorising payments with a touch or glance through the user’s banking app or a trusted third-party provider connected via open banking,” says Glaser.

If open banking does reach its full potential, then he predicts the industry will see greater competition. And for banks that are prepared to innovate and invest in APIs and supporting infrastructure, that could be good news, even if they take a hit on transaction fees in the short term.

“They also have the opportunity to leverage open banking to develop new services and deepen customer relationships,” says Glaser. “Merchants also stand to benefit from lower transaction fees and faster settlement times, and consumers could see lower costs, greater convenience, and increased control over their financial data.

“Ultimately, fintech companies are the biggest potential beneficiaries, as open banking provides a platform for innovation and competition.”

This article was published in The Paytech Magazine Issue 13, Page 30-31