Transfers without On-Demand authorization in Sandbox

Please correct me if I have misinterpreted some piece of documentation.

Currently in Sandbox.
Source is an unverified customer’s verified bank account (verified via micro-deposits). Not created with on-demand authorization.
Destination is master account’s ‘balance’ funding source.
I am able to create transfers in Sandbox and process these Sandbox transfers successfully(by success I mean webhook events getting triggered).

Is this behavior expected to stay the same in Production? If yes, then what role does on-demand authorization play?

Hi @ankit_danctuary – this is the expected behavior. Not having On-demand authorization on a funding-source doesn’t necessarily prevent a transfer from being created.

On-demand authorization allows Customers to authorize Dwolla to transfer variable amounts from their bank account using ACH at a later point in time for products or services delivered. This on-demand authorization is supplied along with the Customer’s bank details when creating a new Customer funding source.

I am confused. Help me understand what would be a typical use-case for on-demand authorization.

Case 1: I own the master account M. I create a customer C1. The customer is not verified. Bank account funding source is created and verified using micro-deposits. Do I need on-demand authorization to move funds from my customer’s account C1 to my master account M?

Case 2: I own the master account M. I create a customer C1. The customer is not verified. Bank account funding source is created and verified using micro-deposits. Do I need on-demand authorization to move funds from my customer’s account C1 to another customer’s account C2?

Case 3: I own the master account M. I create a customer C1. The customer is not verified. Bank account funding source is created and verified using micro-deposits. Do I need on-demand authorization to move funds from my master account M to my customer’s account C1?

Case 4: I own the master account M. I create a customer C1. The customer is not verified. Bank account funding source is created and verified using micro-deposits. Do I need on-demand authorization to move funds from another customer’s account C2 to my newly created customer’s account C1?

If a transfer is created without on-demand authorization, will it fail eventually or will it still succeed?

Hi Ankit –

On-demand authorization is used when you’d like to debit the User’s bank funding-source for variable amounts in future dates without them having to explicitly initiate those transfers in your platform.

A typical use case would be a round-up savings app – for example, you buy a $2.75 coffee…that purchase is rounded up to the nearest whole number, with the extra 25 cents pulled from the user’s bank funding-source and saved off somewhere. This means there could be variable amounts pulled from their bank account at various times automatically, for which we’d need to collect on-demand authorization from the user at the time of funding-source creation.

It sounds like there may be some confusion in regards to Customer verification as well. To clarify, when created transfer using Dwolla, at least one party in the transfer needs to be a Verified Entity, and the bank account that is the source of the transfer needs to a verified funding-source.

In Cases 1 and 3, the Customer C1 does not need to be a Verified Customer since your Master Account is the Verified entity.

In Cases 2 and 4, at least one Customer (C1 or C2) needs to be created as a Verified Customer.

In all Cases, the source bank of the transfer needs to be verified.

In Cases 1, 2 and 4, you migh need on-demand authorization if the users will bee debited for variable amounts on future dates without them needing to log in to your app and initiate the transfer.

Hope that helps!