A New Crisis for Banks?

Whilst the banking industry is currently focused on its asset problems, it may have another, arguably more dangerous threat ahead. www.dwolla.com 

This is a start-up which is challenging the ridiculous prices that banks charge for payments. Essentially, it has built a model which permits payments to be made for a maximum of $0.25 per transaction. This compares with the 3%-5% that might be charged by credit card companies and similar fees for telegraphic transfers etc. 

If their model is scalable and able to be launched in the international market, this will crucify the retail banking industry's business model. My take is that there will be enormous pressure to resist it, but that it will succeed on the basis of consumer demand. 

Over the past 10-15 years we have become used to China lead deflation in manufactured goods and Indian lead deflation of service costs. However, this could be a massive factor in future economic development far greater than the 3-5% savings made from not paying bank transaction fees. 

For some time, the analysis has been on the evolution of mobile phone companies becoming 'banks' or the use of the 'square' to replace credit card machines, but the basic business model of charging a few percent hasn't been challenged. Now it may be.