As part of its strategy to enable faster electronic payments, Dwolla Inc. on Tuesday released an application programming interface to enable real-time payments through The Clearing House Payments Co.’s RTP network. Fort Lee, New Jersey-based Cross River Bank Inc. will provide the processing link to the RTP network.
Development of the API, which was completed in about 90 days, was spurred by inquiries from a fintech that was seeking to add a real-time payments application to its platform that it could resell on a white-label basis. A non-disclosure agreement prevents Des Moines, Iowa-based Dwolla, which specializes in APIs for digital payments, from identifying the fintech.
“When we were approached about developing the API, we were pretty far along with real-time payments,” says Dwolla chief executive Brady Harris. “It would have taken the fintech two years to develop the API on its own.”
Dwolla’s strategy in marketing the API is two-fold. First, the company expects to strike deals with other fintechs for access to the API, adds Harris, who replaced Dwolla founder Ben Milne as chief executive in March 2020.
Second, the company intends to offer the API to new and existing customers through its direct-sales team. Businesses accessing the API will also be able to initiate transactions across multiple payment channels, including the automated clearing house and Dwolla’s push-to-debit service, which allows funds to be sent directly to a debit card. The company introduced push-to-debit in September.
“Our aim is to create a frictionless way for small and medium businesses to toggle between different payment modalities,” says Harris, “With our API, [small and medium businesses] can easily build out their payment rails.”
Prior to the launch of the API, Dwolla attempted developing a real-time payments application of its own. The company also contributed to the Federal Reserve’s Faster Payment Task Force and participated in the Mojaloop initiatives in partnership with the Bill and Melinda Gates Foundation to create a customer-centric experience for real-time payments.
“Those experiences gave us a lot of perspective about real-time payments when it came to issues such as messaging formats, how to build directories, error codes, and scalability,” says Ben Schmidt, vice president of product for Dwolla.
While the RTP network is currently the only nationwide real-time payments network, the Fed is scheduled to launch its own real-time payment service, called FedNow, in 2023.
Harris says Dwolla will continue watching the development of FedNow to see where its fits into the real-time payments landscape and whether it will ultimately compete with, or complement, The Clearing House’s RTP network.