For the first time ever, Des Moines-based payments startup Dwolla now lets you pay through its platform without signing up. This is quite a major change, as Dwolla was previously a members-only service, and now all of that friction has been removed for users looking to checkout quickly.

Given the fact that Dwolla only charges a fixed rate of 25¢ per transaction — and will continue to do so — there is now a major incentive for companies and vendors to integrate Dwolla as their default payment service. This, of course, threatens a major and perhaps less liked player in the payments space: PayPal.

Here’s where the value emerges: Let’s say you’re a vendor and sell 10 coats, each priced at $100.  Processing through PayPal will cost you approximately 2.9% + $0.30 per transaction, or a total of $32 ($29 + $3). Dwolla, on the other hand, will charge you $2.50 (remember, 25¢ per transaction).

 Dwolla now lets you pay without signing up, takes a stab at PayPal with low 25¢ fees

For the consumer, the process feels very standard, but the experience is more attractively designed than what PayPal currently offers. The downside, of course, is that Dwolla is less known by the public and unfortunately, customers will have to verify their phone in addition typing in credit card details. Here’s how the process works, more specifically:

  1. Customers checking out as a guest are routed to Dwolla’s offsite gateway
  2. Fill out basic personal information and verify phone
  3. Use Dwolla to connect to financial institution
  4. Review shopping cartPay

To help consumers benefit from the transaction as well, Dwolla has created DwollaPrice, a campaign which encourages vendors to pass on their savings to customers.

Dwolla is launching the new service with 20+ partners, so if you’re a consumer you can check out Small Farm CentralSecondsDash.byPlovgh and Free Agent, among others. If you’re a merchant, check out the link below to get started!

➤ Dwolla for Merchants

For more Dwolla, check out its hackathon in Des Moines. First prize is a cow.

Dwolla also recently released Mass Pay functionality, making the service more competitive with PayPal.

Image credit: Christa Richert