December 3, 2012—In the fight for online payment supremacy, Dwolla is challenging PayPal to a dual. Dwolla recently launched a new Guest Checkout feature for online merchants that will allow shoppers without a Dwolla account to make online purchases. Because Dwolla uses the shopper’s financial institution to pay for transactions, the fees associated with using it are extremely cheaper than PayPal, making Dwolla one of PayPal’s biggest competitors. Starting this week, anyone can use Dwolla to make a one-time payment from their financial institution to an online merchant or marketplace without having to sign up and create an account.

The way Dwolla’s Guest Checkout works is simple. Merchants interested in using Dwolla’s Guest Checkout must first integrate it into their current shopping cart platform. Once integrated, customers who use the service will be routed to Dwolla’s gateway page. Here, buyers will fill out basic information and verify their phone number, which are common practices for online payment services. Once verified, the customer only needs to click and pay to finish the transaction. Unlike PayPal, which charges a commission for each item plus transaction fee, Dwolla only charges a flat-rate of $0.25 per transaction.

“We purposefully designed Dwolla to make it a risk-free, easy-to-integrate, and complimentary way to save our merchants millions in swipe fees,” says Jordan Lampe, spokesperson for Dwolla. When you combine that, our flat 25 cent fees, and an active user base, merchant adoption has been remarkably easy.”

Along with their Guest Checkout service, Dwolla has a new feature called “Dwolla Price”, which allows merchants to pass along the payment-processing costs to shoppers to entice them to choose Dwolla as a payment method. They also have multiple checkout options, shopping-cart plug-ins and any payment less than $10 is free!

So far, Dwolla has over 100,000 users and 15,000 merchants as of April 2012. However, the number is sure to rise as more and more marketplace and ecommerce merchants get their hands on this inexpensive ecommerce feature.