Obvious things about real-time transactions

The number of times a payment can be exchanged before it’s worth $0 assuming the service exchanging the money carries a 3% + 30 cent fee is pretty predictable.

If you start with $100 dollars in such a system you can exchange it 79 times before it’s worth $0.

With Dwolla’s network, as of last week, money retains value as it is exchanged regardless of how much is moved.

  • $1 sent is $1 received.
  • $1,000,000 sent is $1,000,000 received.

The number of times a dollar can be exchanged is only limited by the technical capabilities of the underlying system that is used to move that money.

As most of you know… Everyone in one form or another uses the batch based systems that drive our economy.

Dwolla’s recent change isn’t just about getting a lot of people free ACH services but about leveraging that to build something better.

It’s not trivial to consider how often you can exchange money with a batch system versus a real-time system that is available 24 hours a day, but we don’t talk about it very often. We should.

When you look at these 2 systems side by side the difference is pretty stark:

The amount of time required to exchange a payment 86,400 times using the batch system limited to one time per day is… 236 years.

This is generous because we’re assuming the batch system operates 365 days per year. It does not. I thought the example was extreme enough without removing weekends and bank holidays…

Think about that for a moment… Where real-time is available, and it is available, the variables change dramatically.

When you take 236 years of possibilities and compound it into a single day something is bound to happen.

I’ve talked about this before in the context of days.

I don’t know what will happen but I’d wager something will. I’d also wager the next big innovation isn’t going to come from Dwolla but from developers realizing opportunities in the market we never even saw before let alone had the technology to pull off.