Disruptive payments network Dwolla confirmed today it has raised $5 million in Series B financing in a round led by Union Square Ventures. Also participating in the round are Village Ventures, Thrive Capital, Artists and Instigators and Paige Craig of Betterworks. As a part of the deal, Albert Wenger of Union Square Ventures will join Dwolla’s board.

The company says that additional funding will be used to continue product development, expand its API and “maybe buy some Doritos.” (Yeah, you gotta love these guys).

Dwolla, which offers both an online and mobile payments platform, is primarily a new payments network, not a tool for enabling payments through the existing credit card network. In other words, it’s not the new PayPal. It’s an all-new payment option.  The idea behind the company is to rethink what a payments network would look like if it was built today using web technologies. By eliminating the legacy issues, fraud and overhead, it can lower costs for end users and merchants alike.

The company has had a busy year, rolling out new features and services like Spots, FiSync, Proxi, GRiD and Instant, among other things.

Over the course of 2011, Dwolla says it increased its userbase by 3,200% to over 80,000 accounts and increased its merchant community by 3,000% to over 7,500 accounts. It now processes between $30 and $50 million per month in transactions, both online and on mobile. Due to its lower fees, users end up saving 2%-8% over traditional transactions as well as the typical 30 cent processing fee.

Last month, BetaBeat reported that Dwolla was raising $10 million in financing, but today’s confirmation of the Series B is at half that.