Viridian might be large for a credit union, but with only $1.4 billion in assets (according to wiki) it's really not very big compared to many of the banks and companies that use ACH. In 2011 alone, $33.1 trillion was processed by ACH in 20.2 billion transactions (https://www.nacha.org/node/1130).
To my mind, as someone who works in the financial sector, Dwolla claiming they're going to take on ACH is a huge flashing red light saying that they're either dangerously naive or they really don't understand why banking works as it does - or a combination of the both. Either way, there's no way I'd let my money go near them.
"huge flashing red light saying that they're either dangerously naive or they really don't understand why banking works as it does - or a combination of the both."
1- "Dwolla.com is tested and certified daily to pass the McAfee® SECURE Security Scan. McAfee® SECURE is the world‘s leading provider of website security services and probes Dwolla.com daily for known vulnerabilities. To help address concerns about possible hacker access to your confidential data, and the safety of visiting this site, the "live" McAfee® SECURE mark appears only when this site passes the daily McAfee® SECURE tests."
2 - "Dwolla's data processing technologies are professionally hosted by a company that specializes in hosting solutions. All information provided to Dwolla is encrypted and securely stored to ensure the confidentiality and integrity of our customer’s transactions and Dwolla’s intellectual property.
The hosting provider also enables Dwolla’s solution to be highly available. We have worked with the hosting provider to build in redundancy in our primary data center, and a secondary data center as needed for disasters"
There you have it. 100% hosting uptime and absolute security. Because the security provider is best of breed and "Dwolla's data processing technologies are professionally hosted by a company that specializes in hosting solutions", as opposed to, say, Walmart.
They are hosted by Ongoing Operations, a company that specializes in building out big offsite backup call centers for Fortune 500s to use during natural disasters. They started doing the same thing for datacenters too, with mixed results.
Then, as someone in the financial sector, you can explain "float" and how banks profit from locking up transfers for an extra day or two before the funds are accessible by the recipient.
If Dwolla wants to provide an alternative to big-bank ACH with smaller vigs for the holding banks, what's your beef?
In practical terms, little to no money is likely made from that float - it's more than likely that any money they could make, would be offset by the losses from chargebacks/fraud/mistakes and the operational risk costs of the transactions (for example the risk that while the float is being held one of the two banks declares bankruptcy). I would suspect as well that the float money would be limited in terms of what the bank can use it for in terms of short term investments as it might well fall into regulations regarding the bank's capital reserve requirements as the money doesn't technically belong to the bank at that point.
I'll say though that retail banking is not my area - I work with derivatives and risk.
For what it's worth, I've got no beef at all with someone trying to do ACH better. I just think that for Dwolla to claim that they'll be able to do so is either massive hubris or massive naivety, neither of which I want in my payment processor. They're a tiny company backed by a small company, and that does not bode well for their ability to deal with operational risk when they're talking about these sort of ventures.
In terms of Viridian vs. ACH? Mostly I'd consider it to be relevant just because Viridian's net assets are roughly equal to 25 minutes of ACH's transaction volume. On that basis I'd say that if they're backing a company that's trying to disrupt ACH, then it's an exceptionally high risk venture as their capital pool is tiny in comparison and with the way the venture is described on Dwolla's blog it doesn't sound like there's much (if any) recourse if there are fraudulent transactions.
Or to put it a different way - if you want to disrupt big money, you better have deep pockets.
For comparison with the 'Big Four' US retail banks (and baring in mind that these are international banks as well, so not all assets are US based)
Citi - $1.8T
JP Morgan Chase - $2.265T
BoA Merrill - $2.129T
Wells Fargo - $1.313T
The worlds largest retail banks are somewhere in the $2.5-$3.5T range, with the same caveat about that being spread around the world.
To my mind, as someone who works in the financial sector, Dwolla claiming they're going to take on ACH is a huge flashing red light saying that they're either dangerously naive or they really don't understand why banking works as it does - or a combination of the both. Either way, there's no way I'd let my money go near them.