Dwolla Adds Open Banking to Account-to-Account Payment Solution

Account-to-account (A2A) payment solution Dwolla now offers open banking services.

The new integration, announced Tuesday (Feb. 27), adds services like instant account verification, balance checks and fraud mitigation to the company’s offering, letting mid- to enterprise-sized businesses offer fast and secure A2A payments through Dwolla’s API.

“Traditionally, navigating the complexities of A2A payments has been a challenge for businesses, often requiring multiple vendors, APIs and technical integrations,” the Iowa-based company said in a news release.

“Dwolla enables enterprises to digitally transform their payments by offering a comprehensive, modern solution encompassing instant account verification, balance checks, fraud mitigation and A2A transfers through a unified integration.”

As PYMNTS has written, open banking is a legal framework allowing third-party FinTechs to access financial institutions’ (FIs) financial data to fuel the products and services to customers. Last year, the Consumer Finance Protection Bureau (CFPB) urged financial services providers to “accelerate” its shift toward open banking.

According to the release, Dwolla’s single API lets companies deliver quick, secure A2A transactions through a single vendor, simplifying integration by streamlining contract management, technical integration and ongoing maintenance efforts.

“Dwolla simplifies the A2A payment experience through its Open Banking Services by pre-integrating with leading open banking service providers,” the company said. “This pre-integration ensures a smoother implementation process for businesses, reducing complexity and accelerating time-to-market for A2A payment solutions.”

Despite the benefits of opening banking, recent research by PYMNTS Intelligence finds that some FIs worry more about the drawbacks, such as increased exposure to fraud.

According to the PYMNTS Intelligence study “How Fraud Fears Impact FIs’ Adoption of Faster Payment Solutions,” 46% of FIs said the potential for greater levels of fraud outweighs any rewards they see in open banking,

“For FIs that are already experiencing higher levels of fraud, the percentage of open banking skeptics jumps to 57%,” PYMNTS wrote.

Things improvised somewhat when the topic turned to real-time payments. The survey showed that 81% of all respondents felt confident they could provide secure real-time payments — a feature open banking should accelerate.

“But unlike the other trends identified in the report, the confidence FIs expressed in their ability to facilitate secure real-time payments dropped slightly with institution size,” PYMNTS noted. 

Almost every FI with $100 billion assets under management said offering real-time payments would not hinder their security, while just 78% of FIs with assets under management between $1 billion and $5 billion felt similar confidence.