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Author Topic: Press Release - TradeHill, Inc. Files Suit Against Dwolla, Inc.  (Read 11107 times)
notme
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March 09, 2012, 04:31:24 AM
 #101

When you pay your credit card's interest rate (APY) you pay it to the credit card company, not the merchant.
Right, which you start paying in 30 days or so.

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That is because the credit card company is extending credit to you, and not the merchant.
Sure, at that point. But that's the non-chargeback case. That's not what happens if you reverse the charge.

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The merchant is agreeing to provide you with certain goods or services in exchange of a lump sum payment, in this case disbursed by the credit card company to the merchant on your behalf, just like a bank disburses a sum lump payment to the seller of a house at the closing on your behalf. There is NO credit extended by the merchant, unless you are paying the merchant with a credit card issued by the merchant (i.e. target credit card, etc).
No, one is not "just like" the other. When you buy a house, the seller has *no* agreement with the mortgage company. The mortgage company just pays them. When you buy something with a credit card, there is a contractual arrangement between the merchant and the credit card issuer. These two situations are simply not comparable at all.

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With your logic, the seller of a house will be providing credit "in part" to the buyer, along with the bank when a mortgage is closed. Months later, if the buyer of the house quits paying, the bank will know on the sellers door and ask for the money back.
I don't understand what you mean by "with my logic". These are two different factual situations. With a home mortgage, the mortgage company only pays the seller. With a credit card, the merchant has a contract with the bank that sets out a different relationship. This is a factual difference, it's not something you can logic out. You have to read the contracts to understand the relationship. (The contracts are not really freely negotiated though. The credit card issuer tells the merchant to take it or leave it, and Federal law sets out many of the requirements.)

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A "credit card" is an instrument by which the issuing institution extends credit to the customer, and for which collects interests payments, service fees, etc. The whole point for the merchant (in theory) is to delegate the issuing of credit and mitigate risk to a third party.
To mitigate long-term risk, but not short-term risk. And to avoid having to do credit inquiries and avoid having to meet other requirements. Nevertheless, the bank's agreement with the merchant permits them to refuse to collect from the consumer on behalf of the merchant. A merchant cannot use a credit card issuer to protect themselves from the risks associated with their own non-performance and the consumer need not sue the merchant if they have not yet made payment. That's what the contracts between the merchant and the credit card issuer say.

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This really have nothing to do to whom the bank is extending credit to, since in both cases the bank is extending credit to the buyer, not the merchant (or seller).
No, the bank is extending credit to the merchant in the case of a credit card. Why do you think credit card companies bother to investigate merchants or closing down merchant accounts for fraud? The credit card company is collecting the principle on behalf of the merchant and if you do not owe the merchant the principle, you do not owe it to the credit card company. That is the way credit cards work, at least in the United States.

By the way, in the vast majority of cases, this really does benefit the merchants. Very few people would buy a camera from an online store if they had to investigate the camera and the store the way you have to investigate a real estate purchase. And, of course, the credit card issuers don't make much money if consumers are afraid to use their credit cards.

Excellent explanation.

https://www.bitcoin.org/bitcoin.pdf
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March 09, 2012, 04:56:39 AM
 #102

Dwolla claims they don't need licenses, as they use The Members Group to middle man the ACH payments:

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Well it was legal, we just couldn't operate outside of Iowa. For the first two years we built out the platform. We did a sh*tload of testing on a small scale because legally we couldn't launch Dwolla nationwide. We spent two years inside of Iowa fine-tuning Dwolla with the financial institutions, building out some of the initial models, and trying to figure out how to legally do what we do.

How'd you find a legal loophole?

Moving money is an exceptionally regulated business. We're in Iowa, which is sort of conservative — I don't know if that helped us or hurt us, but in the long term I think it helped us. We figured to do this legally, we had two options: we could take in a tremendous amount of money and go out and get licenses, which is how most people do it. But we didn't have access to that kind of capital here.

The other option was to bring in really strategic investors, which is what we did. One of our investors is a financial institution; one is a financial services company.

Our investors do credit and debit processing for banks. So when you get a credit card from your bank, it's being issued by companies like them. Our investors are also distributing our product to financial institutions. So we've been building a payment network, and we can do it legally because of who our investors are.





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April 07, 2012, 10:13:55 AM
 #103

I've experienced weird things like one time my account was -$20 when I withdrew $20 so I emailed them many times and their response where that i owed them money, and I explained that they owed me money and that I thought this was ridicules since dwolla claims you can't go negative. Anyways 5 to 7 emails later and a three-way phone call connection with my bank to verify my information I finally got a zero balance and when I claimed they owed me 20 dollars still they said they need to look back at my statements, Well my written records said they owed me $20 but when i looked back at the statement listing it added up.... I originally thought I just wrote down my transactions wrong but this recent tradehill stuff makes wonder if they gipped me $20...Scumbags
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November 29, 2013, 01:31:26 AM
 #104

Has anyone actually pulled the court documents off of Pacer?  I would like to read just the original complaint and answer to the complaint by the named parties.  I'm guessing that since they haven't been very vocal about this they are just settling out of court.

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December 19, 2013, 09:15:16 AM
 #105

Many thoughts running through my mind after reading this. Considering shorting BTC. Dwolla probably relies a lot on Bitcoin-related businesses for revenue, but all the trouble they're having might push them toward dumping all Bitcoin-businesses as Paxum did instead of fixing their problems. Dwolla's a pretty small start-up... Hopefully they can't afford to dis-associate from Bitcoin. I know a LOT of people who use Dwolla. It's pretty darn close to free for US citizens to get cash into an exchange, and it's the only method I've ever used to transfer money into an exchange. So close to seeing a sustained push through $5, too. Hmm.
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