Dwolla, the socially savvy P2P payment system, launched what its describing as the nation’s first location-based payment technology this week, called “Spots.”

I wrote about Dwolla at the end of January, introducing our readers to its socially-fueled consumer banking platform. Now the Iowan based startup has jumped on the geo-location bandwagon, allowing consumers to pay merchants and friends with an easy to use map tool in the Dwolla app.

“Dwolla is inspired by our current social behaviors and we’ve seen that creating new technologies, built on our own processing network, which cater to these new trends have helped lower the barrier for adoption. We look to new and emerging social behaviors to reinforce the fact that we are the electronic cash option for mobile payments, think of us as Cash 2.0.” Founder Ben Milne

Location selection 220x330 Dwolla adds location to mobile payments with its new Spots feature Milne has just submitted the app today and pending approval it should be available in Apple’s App Store later this month. Currently, Dwolla Spots is exclusive to the Apple iOS. Updates to the Android and Windows 7 versions will be released later this spring.

“Just like the technology we created to send and receive money through Twitter and Facebook, we crafted Dwolla Spots in order to accommodate an emerging social behavior trend where people virtually check in at their present location,” said Dwolla’s CEO and co-founder, Ben Milne. “Not only is Dwolla Spots an opportunity for consumers to combine mobile payments with geo-location status, it is also a new advertising and revenue generator for retailers who can now offer promotions to patrons who are in store or nearby. Moreover, unlike other products or platforms, we’ve crafted our own processing network and that has allowed us to focus on providing an inexpensive and dynamic option to businesses looking to cut out credit card fees.”

Watch this affectionate video demonstrating Spots.