Instead of Competing for App Attention, Dwolla Goes All In on APIs

Rather than compete head-to-head with Apple Pay, PayPal and Venmo, an online payment provider decides to refocus on its API.

This program was produced by the Marketing Department of WIRED and Ars in collaboration with CA Technologies.

It’s not every day that a company sends customers to one of its competitors and even goes a step further by saying the competitor can give customers a better experience with more features. But Dwolla is doing just that.

No, the online payment provider isn’t closing its doors, but instead reinventing itself to focus on the app’s underlying API, which enables companies to create customized payment platforms. As part of the shift, Dwolla removed its payment apps from various app stores in early December, but the company will continue to support current customers.

Two Guys at a Kitchen Table

Dwolla was early to the online payments space when it launched in 2008. But competition has grown fierce in the space. After trying to compete head-to-head with the likes of Apple Pay, PayPal and Venmo, Dwolla’s leaders decided to refocus where they felt the company offered a superior product and expertise.

We decided it was time to say ‘OK, we built this product. Now what is it going to look like in another five years?’

— Ben Milne, founder and CEO, Dwolla

“When we first started the company, it was two guys sitting across from each other at a kitchen table sending money to see if it worked. There was no Venmo or Square. The idea of even being able to pay a friend through an app was pretty novel," says Ben Milne, Dwolla founder and CEO. “Five years later, we are fortunate, with billions of dollars moving through the platform. We decided it was time to say ‘OK, we built this product. Now what is it going to look like in another five years? Where will we fit into the ecosystem?’”

The Path to Reinvention

Dwolla began looking for the answer by asking its heaviest users what they would like to see from the company. Customers responded that they had the ability to create personalized payment experiences, but they felt that the Dwolla infrastructure delivered functionality that they could not recreate. After lots of listening, Dwolla asked customers about white labeling its API, allowing companies to make Dwolla’s technology look and feel like their own brand. The response was overwhelmingly positive.

Last December, Dwolla rolled out its White Label API, while continuing to support its payment apps. This new product began to grow rapidly each month. Revenue numbers quickly made it clear that the best decision would be to focus on the API, instead of the app.

Now, companies such as Goat, an online marketplace that matches buyers and sellers of high-end rare shoes, can integrate the Dwolla White Label API into their existing processing systems and create customized payment processes that meets the specific needs of their customers—without sending the customer to a third-party site.

“Over time, what we’ve really come to terms with is that the ideal way to move money for our customers is through our APIs, and that we want to help them get access to a complex infrastructure so that they can build better, complex experiences that seem simple to their customers,” Milne says.

His biggest piece of advice for other companies contemplating a similar move? Milne reflects on a question a mentor once asked about what he’d do differently if he could start the business over. “If there is an obvious answer to that question, then it’s worth considering,” says Milne. “We are really glad we asked the question, because we feel focusing on our API is an opportunity for us.”

Jennifer GoForth Gregory
By Jennifer GoForth Gregory | January 18, 2017

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