We need net neutrality to make money work better, too

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Over six miles of pneumatic tubes carry messages in the Curb Exchange's ultra-modern system of communications in New York City, Sept. 6, 1947. In this portion of the tube room clerks are -routing buy and sell orders from telephone clerks to the individual trading posts. Orders requiring prompt action are signaled or handed by the clerks on the floor to the brokers. Orders not so urgent other communications are handled through the tube system. ()
Payments systems, the internet, it’s all just a series of tubes.
Image: AP Photo/Dan Grossi

There’s more to the net neutrality debate than Netflix’s troublesome torrent of streaming video.

Dwolla, a company building an online payments network, warned US regulators in a letter today that allowing internet service providers to discriminate against different kinds of data on their networks will hurt attempts to improve financial services. The Federal Communications Commission is considering new rules on the open internet that could include the ability to sell data “fast lanes”—a practice the agency once saw as harmful to internet service.

The online payments network Dwolla, built for consumers and banks, is cheaper and clears transactions faster than credit cards or wire transfers, which rely on outdated electronic transaction-clearing networks. The company’s CEO, Ben Milne, worries that so-called “paid prioritization” could harm competition in this sector if internet providers favor incumbents or develop, as some have, competing payments services.

And of course, Dwolla isn’t the only firm building an online payments network: Besides heavy-hitters PayPal and GoogleWallet, there’s Square, Venmo, and even bitcoin and the other crypto-currencies. Digital payment services depend on low-cost, speedy and reliable internet connections to offer people better options than cash and plastic cards. For startups trying to innovate in this area, paying more for a better connection would make it harder to offer a cheaper service than the older networks used by banks and credit card companies.

Absent that, their customers will likely have fewer options and more hassle—especially small businesses that can’t leverage massive volume to reduce transaction fees paid to banks and credit card companies. That means that the choices made around net neutrality could cut the cost of purchases like your morning cup of coffee—or drive it up.

Which is why Dwolla’s letter to FCC Chairman Tom Wheeler was also addressed to the director of the Consumer Financial Protection Bureau, the agency created in the wake of the 2008 crash to help people avoid being ripped off by predatory mortgage brokers or deceptive banks. The fact that the CFPB is being brought into a once-arcane area of tech policy shows how central the plumbing of the internet has become to our everyday life.