For states, counties, cities, and towns across the United States, efficiently collecting tax payments can be a hit or miss proposition. These entities are hampered by rules requiring lowest cost forms of payment or charging convenience fees that throw up barriers to adoption. In some cases, these issues are having more of an impact in a time when every revenue dollar counts. At the local level, a lot of tax payments are still made via check, but in Iowa, that’s going to change.
From the MIT Technology Review:
To start, Iowa will begin allowing businesses that pay a collective $130 million annually in cigarette stamp taxes to pay with Dwolla. In a press release, the governor said the option is cheaper and safer than processing a paper check, which is how most of these payments are made today.
Dwolla’s ability to bypass the ACH network and move money faster while offering payment processing for a flat 25-cent fee presents a strong value proposition to a market seeking cost-cutting initiatives.
Dwolla slowly is expanding its product set, but have yet to gain significant traction outside of its regional footprint. This may be due to internal dependencies on local financial institution connectivity or a disciplined growth curve in a highly competitive market. Either way, Dwolla is likely reaching a decision point on new growth opportunities. It would certainly make an interesting acquisition for companies such as US Bank or Vantiv looking to expand their capabilities for e-money movement.
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