That can't happen, since credit card companies won't allow this.

However, some merchants could accept _only_ dwolla, which could change the game.

That's exactly my point. In order for me to want to use Dwolla (and pay the $3 set up) I would have to believe that enough merchants out there will let me pay with Dwolla that I would get some unique benefit for using it.

Dwolla is awesome for merchants and neutral for consumers.

I give my customers rewards points for using Dwolla which they don't get when paying with other methods. I'm more of a small business and have to micromanage this all though. (I didn't know this is supposedly against CC terms too haha)

I don't see why my average (online) customer is going to pay $3/mo for this, but then I am probably the only place they are using Dwolla. Also, I am very hands on with them and just take "their word" or fill an order when I get the notice that the 2-3 day travel of funds from their bank to Dwolla is good.

Again, I think this Instant thing all ties back to the CU Exchange feature I discussed before. Dwolla tries to forge a sort of deal where this bank's customers get Instant without the $3/mo fee and Dwolla + the bank chop the other half of money made in "transit time interest".

Long term, I see the success of Instant tied to this, banks being able to offer free Instant as a perk with an account with them, versus Instant used as a cheaper overdraft or standalone feature.

this is exactly the point, unless merchants actually display the discount you receive vs using a credit card then it doesn't matter. More than likely merchants will swallow the profits, and consumers won't see the benefit. I earn quite a bit from rewards points as well, the difference in monetary savings vs credit cards would have to be proportional.