We at photiq talk to a lot of small businesses. What we hear time and time again is how expensive it is to process transactions and how merchants hate accepting credit cards. Meanwhile, we – the consumers love to whip out our credit cards for the smallest of purchases. Even for our morning coffee we can’t seem to find a couple of dollars to pay in cash.
Its a known fact that Visa and MasterCard cost small businesses dearly and eat into profits, but it is seen as a necessary evil. That’s what small business have been told; just bite the bullet and accept that the swipe fee is a cost that needs to be borne, that it increases business because customers will prefer to shop in a place where they can pay with a credit card. That may be partly true. Conventional wisdom suggests that shoppers will indeed gravitate towards a more convenient purchasing experience, but the necessary evil part, we at Photiq we’re not so ready to accept as truth.
We were actually grappling with the same issue that small businesses have been. How could we offer value to our customers and not have to increase our prices to cover the transaction costs that we have to bear? Our model is to charge a small fee per transaction from merchants that use Photiq, plus the credit card fee which we have to pay to process the transaction. The right pricing strategy is fundamental to our success, but merchant after merchant was telling us that we needed to charge the smallest fee possible for them to justify using Photiq. We needed a solution to our dilemma and quickly…
Alternatives for small businesses are out there, but we weren’t keen on integrating with PayPal (as of writing it is how AirBnB transfers money to property owners) and Square wasn’t the right fit for us. But then we came across Dwolla and it was truly a lightbulb moment. We knew we could make this work! Each member of the Photiq team cleared their browsing history and refreshed the page to make sure Dwolla was real. Once we were confident about the integration with Photiq, we set to work.
So, what is Dwolla? Well, in a nutshell, Dwolla is a cash based payment network. If you think about how humans started out by bartering with one another, which was followed by paper money, which was then followed by checks and then followed by credit cards, Dwolla is simply the next step… With Dwolla, you can use your phone, computer, as well as your social networks and physical locations to send and receive cash, for the cheapest price and the most convenience. Very fitting for the 21st century indeed.
So if you are a small business – in particular of your business is a coffee shop and you have customers purchasing coffees with their credit cards, you now get to keep more of your hard earned cash. With Dwolla, transactions under $10 are completely free. For transactions over $10, the fee is just 25 cents. There are no percentages and no hidden fees. The Photiq team checked around and it really doesn’t get any cheaper than this.
At this point, we’re thinking that we’ve probably raised more questions than we have answered. Is it safe? How can they afford to be so cheap? Is it complicated? Social networks…!? We could just copy and paste the text from the “What is Dwolla and How Does It Work” page on their website, but they should be given the credit for answering all of the questions we asked, simply and clearly and we thought you may well want to hear answers to your questions from the horse’s mouth, so we’ve included the link for you.
Whether it is a revolution or an evolution, we think money exchange services such as Dwolla are the future and so are excited to be using it ourselves. The era of expensive swipe fees is coming to an end and small businesses should be the first to celebrate. Tell us what you think…