This comment should be at the top.

I don't see any reason to use Dwolla instead of Paypal if they are going to handle chargebacks the same way.

As much as I hate Paypal, you will earn more money by being able to receive credit cards from different countries through Paypal than being restricted to US customers and forcing them to wait 5 days to get money to Dwolla.

Dwolla puts a lot of attention towards fraud. Have you seen any of the recent changes on the site, articles about how Dwolla combats fraud now? If you want to have a real conversation about it- feel free to email me at [email protected].

Articles do not combat fraud. Until Dwolla actually starts protecting merchants from fraud and covering the losses themselves they will remain unsafe to use.

These resolution steps seem to completely support the notion that the merchant is entirely responsible for fraudulent behavior...

"If a transaction was reversed, what can I do?"

per http://help.dwolla.com/customer/portal/articles/99253-if-a-t...

What you can do:

You may request a copy of the affidavit from Dwolla, who will forward it to you. If you choose, you can then take further action directly with your customer who filed the dispute with the bank.

If you were intially the receiver of the payment, you may send a money request to the other party by logging into your Dwolla account. If you were intially the sender of the payment, you many send another payment to the other party by logging into your Dwolla account.

What you can do:

Contact the other party to work out a resolution.

What you can do:

Contact the Financial Institution directly to see if your account has been closed or is no longer valid.

What you can do:

Contact Dwolla to inquire about verifying information to ensure the account is reopened.

"articles about how Dwolla combats fraud now?"

Links? Nothing obvious I am seeing even with a search for "how Dwolla combats fraud"

Additionally is there any difference (for a merchant) in how Dwolla handles chargebacks vs. a credit card company?

No, Dwolla WILL take your money if they are hit with chargebacks. Do NOT use them if you value your payments.

Do you have any facts on that? I'd love to hear stories and accounts of anything like that happening…

California Northern District Court, Case No. 3:12-cv-01082-MMC Tradehill, Inc. v. Dwolla, Inc. et al

http://www.plainsite.org/flashlight/case.html?id=716058

Yeah, take a real close look at that case, and read about what Dwolla did to Tradehill. Read both sides, Dwolla's and Tradehills. Believe me, Dwolla doesn't come out looking too good. Dwolla rode Tradehill and Bitcoin to viability and prosperity, then turned around and destroyed Tradehill when they started getting some negative press about Bitcoin. It's too bad, because I was an avid Dwolla user and was impressed with their approach to technology.

But this is my biased opinion as a Bitcoin user (and former Dwolla user). Please go read about it yourself. Perhaps others will come to a different conclusion.

Anyone that is thinking about using Dwolla needs to read about this incident and understand what happened. Dwolla was completely unable to understand or handle the fraud. In addition, they are in total denial that the only reason anyone cares about them is because MtGox (a bitcoin exchange) uses them and brings lots of volume to their platform.

I run Bitfloor and was hit with similar fraud as Tradehill (on a much much smaller scale) and Dwolla was just as ignorant and dismissive of it. Fundamentally, they went into a business that they did not understand. I know this to be true because early on (even before any Tradehill incident) we emailed them to ask about ACH chargebacks and how they handle them. They claimed there were no chargebacks and this was everything I needed to know about their lack of understanding.

It personally happened to me. I had a Dwolla merchant account for a while and then it was hit with fraud. Dwolla took all the funds out of my account and provided no real way for me to try and get them back. They WILL NOT work with you to recover your funds, they will just take them to cover their ass. They have no incentive to recover them since they just pass the fraud and costs onto you.

I would also suggest you read: http://www.shtylman.com/archives/319

A while back I recapped what happend between myself and Dwolla and why they are not a useful service.

Have you read their new procedure and dispute policy?

Honestly, as long as they are still passing the chargebacks on to merchants then none of these "procedures" matter. Because Dwolla keeps the user information secret you have to trust them to do all the resolution and such. In the meantime, you are still out of funds and have no recourse.