In the last few months, I’ve had many a bone to pick with PayPal, which I consider eBay’s monetary equivalent of the Death Star from “Star Wars.” Whenever someone sends me money for an item I sell on eBay, PayPal sees good to take 2.9 percent on the total sale, plus 30 cents per transaction.

They actually call this a “small fee,” yet it’s anything but: Just for the privilege of using their cyberspace for a few seconds, I have to give PayPal $29.30 on a $1,000 sale. That adds up to lots of cash after a while, and for what?

Here’s what: PayPal also holds onto my money, sometimes for weeks after I’ve made an eBay sale and sent the auction item to a happy customer. Here’s the bottom line: PayPal should be regulated like a bank, but it isn’t. “This means that PayPal offers none of the protection that real banks offer, and it isn’t required to maintain any of the security, customer service or dispute resolution services that banks provide,” write Ed Grabianowski and Stephanie Crawford on the site “At the same time, PayPal holds large amounts of their customers’ money, makes millions of financial transactions and even offers credit and debit cards.”

I’m not alone in my anti-PayPal sentiment. The Facebook page PayPal Sucks has 64,853 likes and lots of disgruntled postings on it, many of them laced with profanity. As for me, I like to keep my gripes civil — and I also like to investigate sensible alternatives when I see them. Enter Dwolla.

Dwolla may not soon replace PayPal in terms of popularity or utility, but it certainly sounds promising: It’s a cash-based payment network that allows you to purchase goods and services, while also giving you freedom to send and receive cash with anyone via a peer-to-peer platform. The difference is that Dwolla, which got its start in Iowa, does this without fees or debt-inducing policies.

This map shows all the businesses where Dwolla is welcome, and a number of online businesses accept Dwolla as well. It can also be used to send donations to non-profits and charities, making the process of giving more automatic and cyber-friendly. And at a time when mobile is everything, Dwolla has apps for the iPhone and Android platforms. You can even tweet money with it: Just tweet the Twitter handle of your cash recipient and amount you’re transmitting and add “#dwolla.” The money gets deposited to the recipient’s Dwolla account in real time.

Dwolla’s beauty is that it creates an “online cash system,” which allows you to bypass credit cards (and all the fees and security issues that go with them) while paying for the things you need. If there’s a weakness to all of this, it’s that Dwolla-savvy merchants don’t number in the millions just yet. But perhaps they will in the not-too-distant future, because Dwolla doesn’t penalize merchants a swipe fee of between 2 and 7 percent per purchase. Instead, it charges 25 cents, a fee that disappears when the transaction amount is less than $10.

Here’s an illustration from the Dwolla Blog that illustrates the difference in fees business owners pay Dwolla per transaction versus what they would pay to a credit card network. You can quickly see why merchants of all sizes would be interested in getting more people to pay with Dwolla instead of plastic!

Electronic payment network Dwolla eliminates fees charged by credit card networks.

To see how easy this was, I signed up on Dwolla and timed it with a stopwatch. The whole process took 6 minutes, about 2 of which were eaten up by my uber-slow email service not posting my verification link right away. If you want to sign up even faster, make sure you have your banking information handy, including your Social Security number, bank routing number and bank account number. This is how you’ll transfer money in and out of Dwolla, though the actual transactions don’t put any of your banking information out there. Instead, you’re doing the online equivalent of handing cash over on the Internet without having to enter your debit card and bank account number with each transaction.

While high fees and exploitative practices may rule the roost in some corners of the Internet, services like Dwolla have grasped the future, and a key point of wisdom to go with it: You can make money through high transaction volume, while still giving hard-working merchants and loyal customers a break with fees. It’s not a lesson I expect PayPal to grasp anytime soon, but I know better than to beat my head against a wall of corporate indifference.

Besides, the real power lies not with fighting the big guys, but in countless little guys like me realizing that it’s our money, after all. Why not walk it over to someplace that respects how hard I work to earn it, and how much I want to effectively steward it?

And if Dwolla wants to adapt Admiral Ackbar or Yoda as a spokesman, so much the better.

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About the author

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Based in Chicago, Lou Carlozo is a personal finance contributor for Reuters Money, a columnist with, and a former managing editor at AOL's Contact him with story ideas for Money Under 30 at [email protected], or follow him via LinkedIn and Twitter (@LouCarlozo63).