But for it to turn into a direct benefit for you, merchants would have to give you a discount for using Dwolla.

Does that/can that happen?

I give my customers rewards points for using Dwolla which they don't get when paying with other methods. I'm more of a small business and have to micromanage this all though. (I didn't know this is supposedly against CC terms too haha)

I don't see why my average (online) customer is going to pay $3/mo for this, but then I am probably the only place they are using Dwolla. Also, I am very hands on with them and just take "their word" or fill an order when I get the notice that the 2-3 day travel of funds from their bank to Dwolla is good.

Again, I think this Instant thing all ties back to the CU Exchange feature I discussed before. Dwolla tries to forge a sort of deal where this bank's customers get Instant without the $3/mo fee and Dwolla + the bank chop the other half of money made in "transit time interest".

Long term, I see the success of Instant tied to this, banks being able to offer free Instant as a perk with an account with them, versus Instant used as a cheaper overdraft or standalone feature.

That's exactly my point. In order for me to want to use Dwolla (and pay the $3 set up) I would have to believe that enough merchants out there will let me pay with Dwolla that I would get some unique benefit for using it.

Dwolla is awesome for merchants and neutral for consumers.

That can't happen, since credit card companies won't allow this.

However, some merchants could accept _only_ dwolla, which could change the game.

CC would be against this but isn't the target merchant the one that does not already take CCs? Street merchant, plumber, kid that shovels my driveway, or wheeled merchant.

Don't discount the possibility that this might be fixed with legislation.

this is exactly the point, unless merchants actually display the discount you receive vs using a credit card then it doesn't matter. More than likely merchants will swallow the profits, and consumers won't see the benefit. I earn quite a bit from rewards points as well, the difference in monetary savings vs credit cards would have to be proportional.