State taxes accepts Dwolla

Iowa businesses could be in for a lifesaver when it comes to paying state taxes. The State of Iowa recently announced some major changes in its payment procedures, and it involves a tech startup from the very unlikely city of… Des Moines.                

Dwolla, a 3-year-old startup created by Ben Milne and Shane Neuerburg, is a mobile payment platform that enables people to send and receive funds digitally with just their smartphone or on its website. The digital balance can even be used to send checks to pay bills. It’s free to own an account, and fees of 25 cents only apply for transactions of more than $10; everything less is free. With a deal like that, it’s no wonder they were moving $1 million per month only six months after launching.                

The state government’s first use for Dwolla will be for businesses to pay for cigarette tax stamps electronically rather than mailing checks and waiting for it to be processed. Businesses are currently paying upwards of $100 million a year for cigarette stamps. Electronic payments and filing of this paperwork should increase turnaround time and reduce the cost of man hours involved.                

Compared to other mobile payment startups, Dwolla still has a lot of marketshare to gain. With PayPal dominating electronic payments, thanks to its early start, it’s been hard for many competitors like Venmo, Square and Dwolla to get exposure. But thanks to small businesses exploring cost-effective alternatives and smartphones becoming more common than cash, more progress is being made. Starbucks adopted Square as its credit card payment method last year. Government and business adoption of mobile payments at this pace could make it the norm very soon. CV

Robert Anhalt is Director of Content at Geek Speak Forum and contributes to Cityview.