Dwolla, BBVA Compass partner to bring payments into real time

BBVA Compass customers can now bypass the antiquated three- or four-day processing delay of the Automated Clearing House when sending or receiving funds.

Last October, BBVA Compass, a unit of Spanish bank BBVA, announced plans to integrate with the Des Moines, Iowa-based payment startup Dwolla, which runs a real-time money movement network.

But it took until today for the partnership to become reality. Beginning Wednesday, BBVA Compass customers can bypass the antiquated three- or four-day processing delay of the Automated Clearing House (ACH) when sending or receiving funds.

The collaboration makes BBVA Compass the largest financial institution to use the Dwolla platform.

As part of the integration, businesses and individuals with a US BBVA bank account can instantly move money at a flat fee of 25 cents for transactions more than $10; transactions less than that are processed for free.

The real-time payment aspect is central to the new BBVA integration, and really represents the heart of Dwolla's platform.

The companies say that real-time transfers are useful for a range of companies -- from startups to enterprises to SMBs -- that are looking for a secure and inexpensive way to collect funds, make disbursements or handle B2B payments.

For small business customers specifically, the real-time service can be used as an alternative to checks when disbursing money or meeting payroll, for example, giving them a more accurate picture of their financials at any given time.

As for the technical side of the partnership, it marks the debut of Dwolla's FiSync secure authentication protocol. FiSync uses a tokenization process to remove sensitive bank account information and credentials from Dwolla's or any other party's systems.

The companies are also pitching the service to developers and innovators, who can use Dwolla's APIs to create their own custom real-time applications or business processes.

"FiSync will give anyone with a BBVA Compass relationship a real-time platform to innovate new services, build compelling products or improve existing systems," said Dwolla CEO Ben Milne.

Coincidentally, the partnership comes at a time when the US Federal Reserve is nudging the payment industry to create a real-time payment infrastructure within five to 10 years. Many of the country's largest banks have opposed the idea, calling the transition a large expense with little ROI.

However, it's unlikely the banks will try to hold out indefinitely when faced with increasing pressure from more nimble and innovative competitors. Not to mention the fact that the US is one of the few major payment infrastructures still not operating in real time.