See the Dwolla Difference → View the Demo App
Close Announcement Bar

We’ve compiled answers to some of the most frequently asked questions that Dwolla’s success team receives from prospects and clients who want a better understanding of how programmable payments work.

Topics range from understanding ACH payments to customer onboarding and funding source verification requirements. Resources are included for topics that include fraud, 1099-Ks and transfer speeds. 

Use the navigation to jump to specific topics.

How are ACH payments processed? How do ACH payments work? Are ACH deposits available immediately?

Electronic ACH payments are a popular type of payment method for businesses to offer because of the economical benefits that come with bank-to-bank transfers. ACH transfers travel electronically through the Automated Clearing House (ACH) Network, a highly regulated batch-processing system that facilitates the transfer of funds among banks and credit unions. The ACH Network processes two types of transactions: ACH credit and ACH debit. An ACH credit or push transaction is initiated by the payer of funds for sending money to a receiving party. An ACH debit or pull transaction is initiated by the receiver of funds to collect money from the paying party. A standard ACH debit through Dwolla will be made available in the Dwolla Network three to four business days after the transfer is sent.

Suggested Resources:

What happens when a transfer fails? How do we know a transfer fails? Are we able to tell why an ACH transfer failed? What is a return code?

The Dwolla API will automatically send a transfer failure webhook with an ACH return code. Some of the most common reasons for a transfer to fail are Insufficient Funds (R01), No Account/Unable to Locate Account (R03) and Transfer Not Authorized (R10). Create up to five webhook subscriptions in production and stay updated with transfer, funding sources or customer onboarding events.

View the entire list of common ACH return codes here.

The majority of return codes have a two banking day turnaround time. However, unauthorized debits to consumer accounts typically have a 60 calendar day return time frame, meaning a consumer can dispute a transaction as unauthorized during this time period. Some return codes can result in automatic account deactivation and/or funding source removal of the end user. Once the Client has reviewed and validated the end user, they are able to re-activate the end user account directly in the Dwolla Dashboard or via the API.

Dwolla clients can monitor the status of each transfer directly in their dashboard or by retrieving the transfer via the API using its account or customer ID.

What causes a negative balance for an end user? Does the negative balance prevent any incoming transfers? Does a negative balance within an end user cause my application to be suspended? Who is responsible for the negative balance?

A negative balance occurs when funds are withdrawn out of the Dwolla Network before a return code is received from the financial institution of the sending party. When Dwolla receives the return code, at this point the transaction cannot be reversed and funds cannot be pulled out of the receiver’s bank account. Therefore, the funds are pulled out of the end user’s balance, causing the funding source to go negative and putting the Client’s application at a loss.

The handling of negative balances is a fully automated process to align with all relevant rules and regulations.

As a Client of Dwolla, your business is responsible for making whole any negative balances that occur. If the negative balance is not manually corrected, the Client will be billed for the full amount owed. This applies to all balances for end users as well. Should a Client fail to make whole negative balances, the application will be suspended after receiving proper notification.

Does Dwolla provide any fraud monitoring services? What happens if we encounter fraud on our application? How do we report any fraudulent activity? Are we required to report any suspicious activity? Can we prevent suspected fraudulent payment from going through successfully?

Dwolla can provide general guidance based on our industry experience but does not provide fraud, risk or specific monitoring protection services directly. Dwolla does have various partners who provide such support. Every company is different and has its own unique needs and obligations to prevent fraud. However, every company should be aware of how fraud can occur and the importance of proper customer onboarding. 

Should your application encounter suspicious activity, you are not required to report anything to Dwolla. However, please reach out to your Account Manager if you need to determine if there’s anything that Dwolla might be able to do to help prevent fraudulent payments from going through.

Suggested Resources:

How long does it take for an ACH transfer to clear? How can we expedite transfers for our business? Do expedited transfer speeds cost more? How do I access faster payments? 

Transactions through the ACH Network are processed at predetermined intervals throughout each business day. ACH transfers from bank to bank can take between four to five business days to complete but there are options to send and receive funds much quicker. Dwolla supports expediting these transfer timelines—but faster transfers do come with a higher cost for the additional risk. Talk with your Account Manager to learn more about faster transfers.

Why are expedited ACH transfers riskier? Why do expedited ACH transfer speeds cost more? What are the different options for expediting the speed of a payment? Does Dwolla support real-time transfers?

Expedited ACH transfer speeds, such as Same Day ACH, are increasing in popularity among businesses offering ACH payments. Because of the increased transfer speed, financial institutions have less time to review each transfer. And while financial institutions have adequate controls in place to support a thorough review, the opportunity still exists for a delay authenticating and verifying ACH payment senders, payment recipients and transaction amounts from origination to receipt. This delay puts the client at a higher risk for having possible returns.

To learn more about the different types of transfer speeds and real-time transfers available on the Dwolla Network, view this resource.

What is a real-time payment? Does Dwolla support real-time payment transfers? What’s the difference between Same Day ACH and RTP?

A real-time payment is a type of payment with instant delivery and availability of funds to the receiver. In the U.S., this typically refers to transfers sent via the RTP® Network from The Clearing House. Dwolla does support this type of transfer. If your business is interested in accessing bank-to-bank payment transfers that settle instantly, please contact us so we can understand your business’ needs.

Payments that happen between balances within the Dwolla Network are also made available in real time (but this does not occur using the RTP® Network).

Same Day ACH transactions are cleared in batches via the ACH Network. Same Day ACH transactions on the Dwolla Network can take up to 1 business day to settle to the recipient’s bank account, depending on when the request was made.

RTP transactions are sent individually via the RTP® Network to a bank account and settle in seconds.

Suggested Resources:

What are the different types of customers that I can onboard for my application? What are the benefits of each customer type? 

Businesses can choose between 3 customer types when integrating Dwolla’s technology: Verified Customer, Unverified Customer or Receive-Only User. 

Whether it is a business or individual, a Verified Customer can send payments, receive payments, hold a balance and have higher transfer limits. These capabilities come with a more extensive onboarding experience. 

Unverified Customers can interact with a Verified Customer for sending and receiving payments, with a more lightweight onboarding experience. 

A Receive-Only User has the lightest onboarding experience and is only allowed to receive payments. 


What is required for an end user to go through full verification? Do those requirements change if a business is needing to be verified? What customer type would give my platform the most flexibility to grow? 

An individual being onboarded as a Verified Customer will need to go through CIP verification prior to being able to send funds to or from their bank. CIP verification involves passing customer data to verify their identity, including their name, date of birth and last four digits of their social security number.

Businesses onboarded as Verified Customers are unique in their sign up flow, as they may need multiple individuals to be verified in addition to the business itself. Depending on the business type, we may need to verify a controller of the business and any beneficial owners of the business.

Suggested Resources:

What does retry mean for an account that is being onboarded? How do I allow a customer to resubmit or update their information? What causes a customer to be suspended? How do I unsuspend an end user? If an account is suspended, what happens to any pending transfers?

Retry is the state that occurs when the initial scores received back from our third party verification system are not sufficient to verify the customer. Your application should prompt the customer to double-check their information they have provided for accuracy. If additional assistance is needed, please reach out to your Account Manager to manually reset the customer’s account.

A customer could enter suspended status after an initial retry attempt. A customer can become suspended if the information provided is not sufficient (address, date of birth, etc.). If a customer ends up with a suspended status, you will need to contact your Account Manager or the support team at for assistance to unsuspend the account.

If an account becomes suspended, the customer will not be able to send or receive any transfers or pending transfers.

What is OFAC and why does Dwolla have to do OFAC checks?

OFAC stands for the Office of Foreign Assets Control, an agency that enforces economic sanctions programs against countries and groups of individuals, such as terrorists and narcotic traffickers. This federal agency has a list of bad actors that Dwolla uses to help Clients mitigate risk.

If a customer that is being onboarded has an OFAC “red flag” or alert on their history, the account will automatically become suspended and require a manual review from Dwolla’s Risk and Compliance Team, should it be requested. False positives can happen and Dwolla is able to review and manually verify with a request for additional identification. Clients are able to have these types of manual reviews facilitated via their dedicated communication channel with their support team or email. 

What does document mean for an account that is being onboarded? What types of business documents are accepted? What types of individual documents are accepted? Why is an ID required? What happens if the end user is not a U.S. resident? If an end user followed all steps and still wasn’t verified, what would the end user be missing?

Verified Customers are required to upload certain identifying documents for manual review in order to be verified. An account will have a status of document if one of the required documents needs additional review or needs to be resubmitted. 


Tips for uploading documents include: 

  • PDFs are not an accepted file format 
  • Avoid using flash when taking a photo of identification; glares and holograms will hinder the verification process
  • Only color photos are accepted
  • Make sure all corners of the ID or document are in the photo

All Verified Customers on Dwolla’s platform are required to have U.S. bank accounts and have a valid U.S. driver’s license, passport or visa. Please reach out to with any questions.

Suggested Resources:

What does document mean for an account that is being onboarded? What types of individual documents are accepted? Why is an ID required? What happens if the customer is not a U.S. resident? If a customer followed all steps and still wasn’t verified, what would they be missing?

Some Verified Customers are required to upload certain identifying documents for manual review in order to be verified. For individuals, Dwolla accepts U.S. State IDs, U.S. Driver’s Licenses, U.S. Passport Cards, U.S. Visas and U.S. Employment Authorization cards for account verification. Read more on accepted document types here.

Tips for uploading documents include: 

  • PDFs are not an accepted file format
  • Do not use flash when taking a photo of identification; glares and holograms will hinder the verification process
  • Only color photos are accepted
  • Make sure all corners of the ID or document are in the photo

All Verified Customers on Dwolla’s platform are required to have U.S. bank accounts and have a valid U.S. driver’s license, passport or visa. Please reach out to with any questions.

What types of business documents are accepted? Once verified, is there any way to edit the end user information or “un-verify” if necessary? What is beneficial ownership? 

Verified Customer as a “Business Account” requires uploading certain identifying documents for manual review in order to be verified. For businesses, EIN Letter (IRS-issued SS4 confirmation letter), Limited Liability Corporation (LLC), Corporation: EIN Letter (IRS-issued SS4 confirmation letter) and Sole Proprietorship documents are allowed. Read more on accepted document types here.

To help the government fight financial crime, the existing United States Federal Customer Due Diligence rules were amended to clarify and strengthen customer due diligence requirements. The Customer Due Diligence Rule imposes a requirement for verifying the identity of beneficial owner(s) of Dwolla’s Clients and end users that are not natural persons. These legal entities can be abused to disguise involvement in terrorist financing, money laundering, tax evasion, corruption, fraud and other financial crimes. Requiring the disclosure of key individuals who ultimately own or control a legal entity (i.e. the beneficial owners) helps law enforcement investigate and prosecute these crimes.

Essentially, we must verify the personal identity of individuals who maintain significant control over an organization. This is very similar to the current process of identifying and verifying the Authorized Representative, with the addition of a few more data elements.

There is also a requirement to capture the personal information of any individual who owns more than 25% of a business registering for an account on Dwolla’s platform. An end user onboarding a Verified Business customer is required to certify that the information they have provided regarding beneficial owners is accurate and complete. 

Suggested Resources:

Does a funding source have to be verified in order to send or receive funds? What if my bank cannot be added via Instant Account Verification (IAV)? How long do micro-deposits take to send? Is there any way to verify the micro-deposits on your end? What can be done to expedite the micro-deposits to get an account ready faster?

Funding sources must be verified in order to send funds. End users only receiving funds are not required to verify their funding source; however, verifying a funding source can help mitigate the risks of ACH returns and potential fraudsters. A business has several options for bank account verification with Dwolla’s platform: Dwolla Instant Account Verification, micro-deposits or third-party verification.


Suggested Resources:

What is a 1099-K? How can I change the information on my 1099-K?

As a payment network, Dwolla is required to report payments that flow through our network in accordance with federal and state requirements. The form used for this reporting is the Form 1099-K.  

For each tax year, Dwolla files a Form 1099-K with the relevant federal and/or state agencies and mails Clients and their end users a copy because certain reporting thresholds have been met. 

Suggested Resources: 

Account to Account Payment Solution

Interested In Modernizing Your Payments?