Iowa partners with Dwolla to offer electronic tax payment option to businesses

In the mobile payment world, Dwolla remains one of the lesser-known players, though it has a pretty compelling business pitch — transactions under $10 are free, and bigger ones are only 25 cents each. That low transaction rate has made it desirable to businesses, and now the company is branching out into government as well. Dwolla’s home state of Iowa will start using the service to accept some tax payments — specifically, it’ll be used for businesses paying Iowa’s cigarette stamp tax. Businesses pay more than $100 million in cigarette stamp taxes, but Iowa plans to look for more areas to roll out Dwolla payments in the future based on this initial assessment.

“Dwolla is a safe, secure payment method, and we are proud as a state to be partnering with such a great Iowa company,” said Iowa governor Terry Branstad. “This new method is an efficient, effective means of payment for Iowa taxpayers, and I look forward to expanding this service into additional areas within state government.” While Dwolla may not be as well-known as other options like ISIS and Square, the service should benefit from its new government contract. And it’s both exciting and surprising to see a state government make a progressive move and take on some lesser-known technology like Iowa is with Dwolla.