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Ever wonder why electronic payments take a few days to clear your bank account? It’s due to the 40-year-old automated clearing house (ACH), the complex but reliable financial system that processes more than $30 trillion in payments a year.

At a time when knowledge is becoming instant, Dwolla, a payments startup in Des Moines, Iowa, thinks that’s a few days too many. In February, I wrote about its plans to completely bypass ACH and innovate a new real-time payments pathway. On Friday, that service went live with the 160,000 customers of the Veridian Credit Union. Today,  these customers can make instant payments from their bank accounts through Dwolla. The company says the transactions have added security layers not seen today in the ACH system, and don’t contain as much sensitive customer information that makes them vulnerable to theft and data breaches. 

Ben Milne, the company’s brash founder, was busy meeting with bigger banks when I spoke with him a few months ago. It’ll be interesting to see whether he’s able to sign them up so their customers can easily integrate their bank accounts. That would really give Dwolla an edge amid a growing number of companies, large and small, lining up to change how we move our money around.

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Tagged: Business, A123 Systems

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