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Payment APIs With Skyler Nesheim of Dwolla

Payment APIs that automate payment processing bring a tremendous amount of value to businesses looking for more seamless customer experiences around payments.

On this episode, our guest is Skyler Nesheim, SVP of Technology at Dwolla. Dwolla is a FinTech company that is changing the way innovative businesses move money. Since 2008, Dwolla’s modern platform has powered billions in payments for millions of end users.

Payments & Fintech Insights In This Episode

  • Why automating payment processing with payment APIs is so powerful.
  • The story behind Dwolla, and how they approach onboarding as well as simplicity with their customers.
  • What being bank agnostic means for the payment flexibility Dwolla offers.
  • Skyler’s thoughts on the future of payment APIs and the larger fintech landscape.
  • With so much more!

Featured on the Show

Episode Transcript

Scott: Hey. How’s it going, everybody? Scott here with you once again, and welcome to another episode of “PayPod: The Payments and Fintech” podcast. We have got a good one on tap for you today where we’re going to be turning our attention back to the world of payments, specifically. We’re going to be doing that by exploring the power of payment APIs which automate payment processing. What’s the real value to businesses? How does it work for a company that hasn’t automated payment processing before?

Joining the show to help answer these questions and a whole lot more is Skyler Nesheim, who is the SVP of Technology at Dwolla. Dwolla is a FinTech company that is changing the way innovative businesses move money. Since 2008, Dwolla’s modern platform has powered billions in payments for millions of end-users. So, needless to say, bringing someone on to talk about this, I think we’ve got a great person there. So, let’s dive right in. Skyler, welcome to the show.

Skyler: Hey, Scott. Thanks so much for having me. This is gonna be great.

Scott: Thanks for being here. As I said, and really to kick our discussion off, as you look at the landscape of companies today, many of which offer apps, SaaS solutions and beyond, when it comes to their payments stack, customers may end up going to another website to complete checkout, or maybe having an experience that brings them out of the company’s ecosystem. In another way, what’s the real power or advantage of automating their payment processing with a payment API to make a more seamless customer experience? Put another way, why payment APIs?

Skyler: Well, Dwolla has been working in payment APIs for quite some time. And we think that the real value in utilizing payment APIs is that it gives you the ability to embed financial services into your application. So, if you’re a developer that’s working on the next great app for gig economy, or a marketplace, or insurance, you don’t have to send your users outside of your website or outside of your payment, outside of your experience in order to collect funds. You can do that all within your application. And one other thing that’s really unique about what’s going on right now in the United States is we’re in the midst of a really exciting time and opportunity where we’re starting to see some of the techniques and some of the ways that payments are done in other places like Europe start to emerge and come to the U.S., and I’m specifically talking about open banking.

At Dwolla, we like to think about open banking kind of like a triangle where there’s really three sides to an open banking picture. The first side is the banks. The banks bring the ability to onboard users, the ability to store funds, things of that nature. The second side is data providers. Data providers allow us to have access to the data of what’s happening on our financial institutions, right? We can see the transaction history. We can get details about the accounts, things of that nature. And then there’s a third side, which you’re asking about as part of this question, which is account-to-account payments. And that’s really the space where Dwolla specializes.

Scott: Right. And looking at all of that, I can just see why there’s so much value in that for the next great app or whatever it may be. I think, though, maybe there’s some people that whether they’re developing an app or what have you, maybe they’re intimidated. They think, “Oh, my gosh.” What are some of the challenges here when I’m trying to develop a more seamless payment solution by myself? Or I’m trying to bring this kind of financial information together? What are some of the challenges that they may face with that or even trying to find a partner to help them improve on that?

Skyler: Yeah, I can see where there’s a lot of things to think about when you’re gonna go add account-to-account payments into your application. And there’s several things that you might be considering and some things that you want to work through. I think this is a great reason to reach out to someone like Dwolla to help partner with you and really take a consultative role in figuring out some of these things. So, one thing that you’ll want to think through is what types of payment methods do you need to support in your application? Are you looking to include ACH? Are you looking to include Push-to-Debit or maybe Push-to-Card? Those words are kind of used synonymously in the industry. Are you looking to implement something like a faster payment scheme? In the U.S., through the Clearing House, we have something called real-time payments, or RTP. So, that’s something that you should be thinking about.

Another thing to be thinking about is what are the requirements that you’re going to have to fulfill in order to onboard your customers into your application? What kinds of information do you need about them? What level of verification do you want to do? So things like that. Another area to think about is how do you want to model the way that funds move to your business? What ways will funds flow through your application? What ways will funds flow out of your application? And consider some of those things. And then there’s all kinds of technical things that you might want to consider. You might want to consider what kind of API you want to work with that might flexible and configure them with your system. What sort of API is gonna allow you to get to market faster for your application? And maybe even what other features are you looking for, such as webhooks or things like that, that might help your application work better with developers in the future?

Scott: That’s so powerful, because even just you going through that, Skyler, I’m kind of getting overwhelmed myself. I’m like, “Oh, my gosh.” There’s so much to think about beyond just if you’ve got a great idea for an app or you’re trying to solve a problem for folks and you think, “Hey, payments, or financial data, this could be a huge key to this.” You could lose sight of that if you try to do too much. And so that’s where a Dwolla can really enter the picture and really specialize by helping with all of that. Can you just expand a bit more on what that might look like, the story behind you guys? And if someone’s there, and they’re like, “All right. I’ve got this great new app. It’s gonna change the world. You haven’t seen anything yet. Uber, you know, move over, whoever it is.” What does that look like if they want to get help from Dwolla?

Skyler: Yeah, that’s a really good point, Scott. I think that Dwolla started from kind of a similar place to the one that you’re talking about. So, if we looked back at Dwolla’s history, and a lot of people remember Dwolla for this, Dwolla started as a P2P payments platform. I don’t know if you remember that or ever worked with that with Dwolla. But we developed in that way. And we had a lot of these same issues and things to discover, like what I just talked about. And I know maybe some of the things that I shared it felt overwhelming or like there were a lot of things, but those are all things you have to consider when developing your business. And so Dwolla started to see…after we had built this peer payments platform, we started to see clients come to us and wanting to offer much of the technology that we were offering ours to their client basis as well. So, we saw a lot of demand for that. But they wanted to offer it in such a way that it didn’t really have Dwolla’s name on it, right? They didn’t want to have to have their users sign up for Dwolla accounts in order to pay folks with a Dwolla API, or something like that.

So, they were looking for a white-labeled solution. And that really caused Dwolla to evolve and look at other products that we could deliver to the market. And so back in 2016, we released the first version. Back then we called it our White Label payment API. And today, we’ve evolved that even more. And what we like to say is that Dwolla powers sophisticated account-to-account payment solutions for innovators.

So, looking back at some of the things that I talked about, some of the platforms that you’ve described, move over, Uber, things of that nature. We’re talking about innovators. That’s who’s looking for the types of solutions that Dwolla offers today. And innovators might be anyone from small startups, all the way up to enterprises. And even within enterprises, we’re seeing folks reach out to us that have innovation arms, where they’re looking to digitally transform part of their experience. They’re contacting Dwolla because they see that we’ve built sophisticated account-to-account payment solutions. And I’m using that word, sophisticated, very specifically because there’s kind of simple payment solutions and then sophisticated payment solutions, where simple payment solutions might be things like paying out your users, or collecting funds from your users, or maybe using one payment method. I talked about those a little bit earlier. Those are really simple payment solutions.

Dwolla specializes in sophisticated payment solutions. And in those cases, we find that folks are bringing multiple payment methods. They might be doing some things via ACH, might be also interested in Same Day ACH, Push-to-Debit or Push-to-Card-type transactions, and potentially faster payment options. So, they want to come to one platform that offers all those different payment methods. And not just those kinds of payment methods, but they’re also looking to offer multiple flow of funds. So, they’re not just looking to do simple pay-ins or simple payouts, they’re looking to do both. There’s actually another use case that Dwolla platform supports, which we call payment facilitation, and that allows an application to not just do simple pay-ins or simple payouts but would allow an application to configure payments to go between two entities without the owner or builder of the application ever coming into the flow of funds. And all of these things are things that can be supported through the Dwolla platform.

Scott: When you think about it, Skyler, these are the kinds of things that if someone is developing a solution, there’s just so much more that can be done when you have that sophisticated payment solution approach to it because now it opens up so much more possibility for a developer, for an innovator, right?

Skyler: Yeah, absolutely. And that’s our goal, right? We want to work with innovators and developers in a really consultative manner. And we built this platform so that it can support more of these sophisticated payment solutions, particularly through account-to-account payments, which is really the area that Dwolla is focused on.

Scott: Absolutely. You kind of were talking about how you really want to embrace that sort of consultative role with folks that you’re working with. Can you break down a bit more like, what does the onboarding process look like? If I’m here and I’ve got my next great app, and I’ve been working on it, I’ve got my development team, is it a matter of, “Hey, Dwolla comes along, and you send some experts to help us. We have lots of conversations. We’re joining your platform.” What does that look like?

Skyler: Well, we have a few different ways to get started on Dwolla. A lot of times, it starts with developers. They’re looking to provide account-to-account payments, they’re searching the web for what will work for them, and they stumble across or they discover the Dwolla platform. We’ve got great DevDocs that allow them to understand everything they’ll need to know about integrating with the API. And we’ve also got a fully functional sandbox environment. So, developers can discover the API, they can go and build their implementation, and even test things out and simulate the flow of funds in our sandbox environment. That’s one way you can get in contact with us. Another way is to reach out to our sales team through our website.

You can contact us and we are excited and happy to discuss through. As I said, we like a consultative approach. So, it’s very common for businesses that are building innovative things to need some help and some guidance. And our sales folks are trained in how to build that stuff up. A lot of times, we’ll even diagram with clients what the flow of funds might look like, how we piece things together, and help advise them in building their payment application. So, that’s another way to get started.

Scott: Right. Because they may not even know exactly what would be best in terms of the flow of funds, and they may be focusing on this. And I can see where your expertise, especially because you’ve helped so many different developers and companies out there where that would really be incredibly valuable. I want to dial in on the dev, the sandbox that you have there, because I’ve worked in business for years and years. And I am not a developer, but I know that you have to treat your developers right, and you have to have tools that are easy to work with. Because if a developer can’t work with something, that’s bad news, if you’re a developer who’s unhappy there. Can you speak more about your sort of philosophy around putting developers in the forefront of the tools that you are putting together and really having a focus on them?

Skyler: Yeah. I guess there’s a few things that come top of mind. The first one is gotta have great developer documentation, and that’s something that people have highlighted about Dwolla. So, when developers have questions and they’re trying to figure out how to make something work, you want to make it as simple as possible to find that answer, and ideally, have it right there in the documentation. So, if I Google it, it pops right up. A second one that comes to mind is having awesome support via standard development kits, or SDKs, for various languages that developers might be using. So, you want to support Node, you want to support Ruby, you want to support Java, all these various languages that developers might be using. You wanna be there and ready to support them.

One of the advantages Dwolla has, as I already mentioned, is our sandbox testing environment. So, not just can you get started on the sandbox without ever having to talk to anyone, but you can also simulate various movement of funds. So, you can simulate different payment methods, ACH, Same Day ACH, Push-to-Card transactions, you can simulate all those things on the Dwolla sandbox. You can also simulate onboarding end-user or your customers on our sandbox. So, you can try different endpoints and you can see how onboarding will work, but you can also check to see various failure scenarios. So, if someone’s not going to be verified, right, you can test what it looks like in your application to have someone fail verification process.

So, that’s another advantage. And then just having other foundational areas of support, I think are important too. So, Dwolla also has a developer support forum, where if you’ve got questions that aren’t answered in the developer documentation and you need some additional assistance, you can post right there. One of our super awesome and friendly dev advocates is going to respond to you really quickly and get information to you to help solve your problem, get you past whatever you’re stuck on. So, we try to make it…again, we’re very focused on providing the solution for innovators. We know so much of innovation depends on development, building on the internet, creating the next great application. So, we really do focus on making sure that developer audience has a great experience when they’re working with Dwolla.

Scott: I love that. I love too that you have dev advocates. I’m sure developers listening right now are nodding like, “That sounds good. That sounds like people are here to support what I’m doing.” Because, you know, also, I feel like so many times you’ll get folks that aren’t developers, and they’re like, “Well, just build it.” And there’s not that kind of understanding, like, “Yeah, but, you know, it doesn’t just snap your fingers.”

Skyler: You’re right. We’re really fortunate to have such a wonderful developer advocate team at Dwolla. If you’ve ever interacted with any of them, they’re just fantastic people who are incredibly knowledgeable about how Dwolla works and functions, and also really, really knowledgeable about the sophisticated account-to-account payment space. So, it’s a great team to have.

Scott: One thing I think that’s so interesting, as you kind of were breaking down, you know, all the tools you have for developers and how they can use your sandbox and see if, “Oh, will there be a failure here?” Whatever. All of this kind of brings to mind something that we talk about on this show quite a bit, which is this idea of friction reduction.

And really having this frictionless experience, whether it’s payments, whether you’re developing, you know, a great app, if you are trying to innovate and you’re trying to have users come back and tell their friends and grow, you need to have that sort of frictionless experience. Can you kind of speak a bit to sort of how you guys approach that idea, whether it’s with payments or just the things that you do? Why that’s maybe something that really is core to what you’re trying to provide?

Skyler: Yeah. We’re really aware that everyone is really trying to find ways to reduce friction in their user experience. And so we try to do whatever we can to support this. And again, it kind of comes back to those innovative developers. If we can put the user experience in their hands through our white-labeled, sophisticated account-to-account payment solution, then they can really dream up and think through the most seamless way to offer that to their client base. That’s something that we really want to support.

Scott: It’s absolutely massive. And I always encourage anyone listening to really consider that with whatever you’re working on. How is the end experience going to be? And is this going to add friction? And if it is, you better make sure it’s going to be for a good reason. Because having too much friction can be bad news bears, so to speak. I want to ask too, and this kind of, I guess, goes into this, the fact that, you know, Dwolla is bank agnostic, and really offering flexibility is something you continue to hang your hat on. Why is that approach when you’re just talking about the pure, you know, working with various financial institutions and things like that? Why is that so critical?

Skyler: Being agnostic to banks I think that flexibility. We want to allow our customers to be interoperable throughout the U.S. So, wherever your customers happen to be banking, we want that to be part of the account-to-account payment solution that we’re providing. And we also want to provide users with a modern suite of features that might not be available through one bank alone. And by working with a Dwolla platform and the Dwolla API, innovators have access to more payment features than they might have by working through just a single bank.

Scott: Right. I mean, it makes so much sense, too, because so many developers, innovators, you want to be able to reach as many people as possible, because if they’re using your app or whatever it might be, and it’s actually we don’t work with your bank. Well, you’re done. Because unless it’s just the best thing I’ve ever seen, I’m not gonna be like, “Well, time to go open a new bank account and do a whole new thing.” And so that’s really, really critical. And it makes so much sense to me why that’s kind of core to what do you guys do in terms of remaining bank agnostic.

Skyler: I think it goes back to the friction that you were talking about in a prior question.

Scott: Absolutely.

Skyler: It doesn’t work with the bank that I like to utilize. That’s a massive form of friction that we’re bringing to the equation.

Scott: Right. Exactly. That can break the whole thing down.

Skyler: Right. And as I’ve been talking about, right, like, we want to enter the space, where open banking is really a reality in the U.S. And in order to move funds between multiple accounts, we really got to support the connection of various bank accounts. It’s not gonna work to just support a few.

Scott: Right. That’s the huge thing about open banking. And you were mentioning also earlier how, you know, you guys are really trying to bring a lot of the great innovations and seamlessness of a lot of payments and finance experiences abroad, in different countries here to the U.S. as well, right?

Skyler: Yeah, exactly.

Scott: So, as we kind of wind down our chat here, Skyler, I always like to turn the attention to the future, because, hey, it’s exciting to see what’s going on right now, but everybody wants to know what’s next. So, if you could peer into the crystal ball, what do you see in the future for Dwolla? Are there any specific technologies or products on the horizon that you can share, of course, that our listeners might find to be interesting?

Skyler: So, one technology that we’re particularly excited about is paired with…I talked about RTP, paired with that being RFP, or request for payment. We’re really excited about that payment capability coming online in the U.S. I know that’s offered in several different areas already. That’s one that we’re really excited to add to our platform and continue to build. We’re also watching closely and excited about FedNow. That’s another area in the faster payments realm that we’re exploring. And then the last one that I’d mentioned that we’re very excited about is international payments. So, the ability to disburse funds outside of the U.S.

Scott: That’s awesome. And that’s becoming more and more important as we continue to become more global, whether it’s in business or what have you in products and services, and that’s going to continue to rise in importance, I would think.

Skyler: Yeah, absolutely. If I’m looking in the crystal ball, that’s what I see.

Scott: Absolutely. All right. We have a segment that we like to end with on each and every show. It’s five questions. It’s rapid-fire. Skyler. Are you ready?

Skyler: I think so.

Scott: Make a prediction about the future of payments that you expect will happen in the next 12 to 24 months?

Skyler: Over the next 12 to 24 months, we’re going to see the emergence of consumer-based account-to-account payment solutions. And so alongside the payment solutions you see today when you check out, you’re going to start to see new ones, like pay with your bank. I’m really excited about that being part of the checkout experience.

Scott: What’s one cool piece of payment or financial-related technology that you’ve come across recently, unrelated directly to your company that impressed you?

Skyler: Yeah, here’s a couple of cool ones. First one that comes to mind is Astro Finance. Astro Finance is a company that allows you to manage money with programmable routines. It’s a really cool concept, and it’s very interesting something that they’re building. Another one that comes to mind is DriveWealth. DriveWealth is working on offering embedded investing, like a modern brokerage infrastructure that you can put into your application both really fascinating use cases.

Scott: Yeah, those sound very, very interesting. In the next five years, most Americans will make a purchase with either Bitcoin, Apple Pay, or something else entirely. Which one do you think and why?

Skyler: I’ve kind of two guesses on this. My first guess is that it’s all of the above because I think people are gonna continue to want options and to use the best option for the situation that they’re in. But the other take that I might have on this is, I don’t know if people…like, if we’ll ever reach a point where people don’t really think about it, or they’re not really worried about what payment method they’re using. So, it will be so intrinsically built into the apps, right? It will be embedded within them. It’ll be a very, very seamless experience. And they won’t be worrying about which payment type do I use with which app will sort of just work seamlessly.

Scott: You know, I have heard that I mentioned before, that sort of idea of, perhaps the best payments experience is one that isn’t experienced at all. You don’t even know what’s happening. You don’t even think about it. It’s not even a thought.

Skyler: Right. Right.

Scott: What’s one piece of advice you would have for someone who’s considering working in the payments or FinTech industry as a career?

Skyler: I heard this said somewhere else, I think it was along the lines of something like, “ACH is really hot right now,” or something else along those lines. And I change it slightly to say, account-to-account payments are hot. Another way might be saying, “Open banking is hot.” Like, this space and working in FinTech as a developer, maybe as a marketer, a product person, there’s so many different career opportunities here. And I just think the space is really, really exciting. And there’s going to be continue to be tons of opportunity here.

Scott: As someone who hosts a FinTech podcast, I could not agree more.

Skyler: I bet.

Scott: Last question here. What’s the best business advice you’ve ever received and from whom?

Skyler: This one’s easy for me. It’d be from our founder, Ben Milne. I learned a lot working with Ben at Dwolla over the years. I’ve been here for almost nine years now. But one of the things that Ben and I have talked about that really, really sticks out to me, is this concept of infinite sum games. And it comes from this background in game theory. And it’s the idea that there are some games where one person has to win and one person has to lose, and the score always works that way. But when it comes to business, comes to partnerships, payments and fintech, in general, it’s really shaping out to be more like an infinite sum game. And really, so many can win as part of the game. It’s not about, you know, one person being able to win taking away from another person. We’re all playing, to some degree, an infinite sum game. And when you start to think about that, it really changes the way that you manage experiences and relationships, I think.

Scott: I couldn’t agree more, and I have seen so much of that through my time in the industry. So, I think that’s really a fantastic insight there. Skyler, thank you so much for joining me on the show today, really sharing so much insight and the story behind Dwolla and the great things you guys are doing and the power of payment APIs, and all of that. And if folks want to find out more, they want to see maybe if you guys can help them out, maybe there’s a developer out there who’s thinking, “You know what? I gotta get some more automated payments going here.” Where can they do that? Where should they go?

Skyler: The best place to start is dwolla.com. Again, you can sign up for a sandbox account and get started there. Also, ways to contact our sales team from those avenues as well.

Scott: Fantastic. Thanks again, Skyler.

Skyler: Thank you so much, Scott.

Industry Spotlight

Dwolla

Dwolla is a fintech company powering innovations through sophisticated account-to-account payment solutions. Dwolla’s robust platform, low-code API and partnership ecosystem simplify the complex process of integrating with the various payment networks to create a single end-to-end solution. Integrating Dwolla’s modern payment technology gives a business the ability to program payments in real-time, on the same day or to a debit card 24/7. With minimal development, start-ups to Fortune 500 companies can gain efficiency, flexibility and improved cash flow by working with Dwolla.