I dont get it... the primary advantage for ME seems to be the smaller transaction fees...
The primary advantage they are showing off is that it bypasses the credit networks. I already bypass the credit networks in Paypal... Paypal doesn't go through my credit cards, it takes cash right out of my band accounts.
That may not be an advantage for you, the consumer, but it is for sellers. You may not see the fees upfront, but if a company is having to pay fees on a per transaction basis, then you can bet that cost is being passed on to you (simply tacked onto your purchase price).
PayPal provides merchant services to sellers so they can accept credit/debit cards online and/or by phone. PayPal charges the seller a fee (a percentage based on the sale) plus $0.30 per transaction. Dwolla works by leveraging the Automated Clearing House (ACH) system, but to do that, _all_ Dwolla accounts must be linked to a checking account. The ACH system is not the credit card system, so they can avoid the pay a toll requirement, and thus can avoid passing on those fees to their users. Dwolla also doesn't charge a percentage of the transaction.
That's how it differs.