How Dwolla’s API is Changing the Way Businesses Manage Payments

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Filip Sobiecki

Updated Feb 27, 2024 • 11 min read
How Dwolla is Changing the Way Businesses Move Money with Skyler Nesheim and Ben Schmitt

In a world where digital payments are the norm, many businesses have begrudgingly accepted the high costs associated with processing credit card payments.

However, alternative means of managing payments are rising in popularity.

One such solution is provided by Dwolla, an account-to-account payment solution for innovators. Founded in 2008, Dwolla was designed to make moving money simple, fast and affordable. The company provides a simplified API that allows companies to build and facilitate fast account-to-account payments, specifically with a focus on ACH (automated clearing house) and real-time payments via The Clearing House.

Skyler Nesheim, Senior Vice President of Technology, and Benjamin Schmitt, Vice President of Product at Dwolla, joined Disruption Talks to explain how Dwolla’s payments API works, the challenges faced in the payments industry and Dwolla’s success secrets.

How do payment networks work?

Traditional payment networks are more complex than most people think.

Something as simple as a credit card transaction has many moving parts and costs associated with them. In between a customer’s purchase and the business, there’s a merchant service provider that charges what’s usually referred to as an “acquirer processing fee.” Essentially, there’s a cost to supporting the payment network’s infrastructure.

How can we cut these costs? The answer is simple. We need to replace that costly infrastructure.

This is what Dwolla offers. Rather than costly credit card fees, Dwolla gives businesses access to a low-cost option using bank transfers.

Dwolla helps businesses integrate an account-to-account payment solution for sending and receiving bank transfers. Dwolla connects with the ACH and RTP® Networks to process digital transactions from account to account in the U.S. without the need for cash, credit cards or a payment processor - and the fees that come along with it.

Filip Sobiecki: Could you give us a short introduction to yourselves and an average day for you?

Benjamin Schmitt: I’ve been at Dwolla for nearly seven years. Prior to being VP of Product, I had a long career in information security at U.S. and international companies. I help discover and deliver business outcomes and find out how things work at a deep level.

No day is the same, but I would put my role into three different buckets.

Bucket number one is strategy, so that’s the roadmap, delivery, planning, problem-solving and prioritizing. The second is tactics, which is helping teams with decisions, removing roadblocks and driving performance against our goals. The last is team development. I spend a lot of time hiring and expanding our team. We’re intentional at Dwolla about professional development and I try to make sure all of our team members feel supported to grow and expand their skill sets.

Skyler Nesheim: I’m the SVP of Tech at Dwolla, and I’ve been here almost nine years now. Like Ben mentioned, I have been fortunate enough to expand my skills while at Dwolla to become the leader of our technology teams. I started off as a software engineer and helped to build systems and our product suite. From there, I’ve continued to step into new roles and take on leadership responsibilities.

As SVP of Tech, I spend my time in four key areas. The first one includes strategic leadership, so I spend a lot of time thinking about how to push the company forward. The second area is evangelism, which includes attending events and discussing the product suite, features or the market.

Another area is architecture, which is about being responsible for our systems, performance and day-to-day operations.

The last area I spend most of my time in is team building and bonding. We have a great team at Dwolla, and a lot of my job is working with that team and making sure that we're cultivating the right culture.

What kind of issues does Dwolla address?

Benjamin Schmitt: We power sophisticated account-to-account payment solutions for innovators. By innovators, I mean someone who’s trying to do something different or introduce an improvement. This could mean making payments faster or a faster time-to-market.

We can meet the needs of sophisticated account-to-account payment solutions for new companies doing something truly innovative.

We can also serve a large company that's innovating and going through a digital transformation.

Skyler Nesheim: At Dwolla, we believe that we play an important part in open banking. We think of open banking as the edges of a triangle. The first edge is the banks themselves. The second is the data providers who give access to information stored in the banks. The third edge is account-to-account payments and how we move funds between banks. That’s the space that Dwolla plays in.

What’s the latest with Dwolla? What can we expect to see over the next year?

Benjamin Schmitt: We’re doing really well and scaling, so we’re hiring a lot. The other way we’re scaling is with the platform. Since the beginning of COVID-19, we’ve seen a big increase in transaction volumes. Over the next year, we expect three times that, so we’re looking at a bigger year in 2022.

We’ve launched a few initiatives over the last year, for example, Real-Time Payments in the U.S. We also built a low code set of offerings.

Getting our customers not just faster payment types, but the ability to get live faster is essential to us.

That's why our API is well documented, we offer a dashboard and these drop-in components help our customers get value even sooner.

Skyler Nesheim: We were really excited to raise a funding round this year which has been partly because of the growth around COVID-19. A lot of businesses that weren’t already thinking about digitally transforming have had to do so, which brought a lot of new interest to Dwolla.

We’re utilizing the funding to expand in faster payments and partnerships. We have a pretty robust ecosystem, so we’re continuing to build out tools and APIs to support partners.

With Dwolla’s impressive growth, what are the biggest challenges with scaling?

Skyler Nesheim: When we think about scaling the company, there are a few different areas that we focus on.

We strive to be data-focused and be more predictive on payment volumes and our projections.

We also do load testing and performance testing to make sure we have things in the right place.

Benjamin Schmitt: We like to think about how customers can solve their own problems. If a customer can solve their own problem, they can do it pretty fast. They have a relationship with their end-users, so we try to help them with that. We may help with technical issues by providing low code or additional data on the dashboard or add additional functionality in the API.

To truly scale, we need to help customers solve their own problems, which can be a challenge.

What’s your advice on building high-performing engineering or product teams?

Skyler Nesheim: One thing that I've started working on is developing a set of common goals for my team. It's really easy to feel like you're moving fast and that you're getting a lot done. I think it’s better if we have fewer goals and a more focused way of working. Instead of eight people focusing on eight different things, it's better to have four people focusing on two things.

The second thing would be thinking about the culture that we want to build within the team.

Benjamin Schmitt: First, every discussion should start with the customer rather than technical elements. Secondly, frameworks are critical to saving time during decision-making so that everyone stays aligned to the primary goal. Another thing is education. You’ve got to stay educated as a payments expert. The last thing is to write stuff down. Having a culture of writing things down and sharing those will help you scale. Process documentation for the win!

What are your typical decision-making frameworks?

Skyler Nesheim: If I have a big decision to make, I don’t like to spend all my time on it. I want to break it down into smaller pieces and make progress on those smaller things. Another thing is I like to write decisions down so I can reference them later. This helps me work out the problem I’m trying to solve.

Benjamin Schmitt: Sometimes it’s difficult to make a decision from just a document, so sometimes we use a kaizen event, which is a five-day team workshop you do to solve a problem or introduce an improvement in a certain area.

Skyler Nesheim: One time, we used a workshop like this to build an idea-to-prototype in a single week. We could have spent several quarters building it, but we tried to make it in just one week. That way, we’d have a decision on whether to go ahead with it faster. In this particular case, we realized the idea was all wrong, so we saved so much time limiting ourselves to a single week.

If you had a magic wand and could give all 12-year-olds in the world a new skill or piece of knowledge, what would it be?

Benjamin Schmitt: As a father to a 12-year-old, I have a two-part answer. The first is critical thinking. I want my daughter to think without bias and develop good judgment. The other one is the ability to fix things, a problem-solving skill. I think we’re conditioned to be consumers, but I want us to be producers. What I mean by that is just because something isn't working doesn't mean we need to replace it. It can be fixed.

Skyler Nesheim: I think if you have good comprehension and reading skills, you really can learn anything. Anything that's been written about, you can learn it. And so, if I can wave that magic wand, I’d give everyone great learning and reading skills.

This discussion is part of our Disruption Talks recordings, where we invite experts to share their insights on winning innovation strategies, the next generation of disruptors, and scaling digital products. To get unlimited access to this interview and many more insights from industry experts, sign up here.

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Filip Sobiecki

Senior Executive at Netguru and host of Disruption Talks
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