

Braintree Launches Instant Approval Product - ComputerGuru
http://finance.yahoo.com/news/braintree-launches-instant-approval-product-140000075.html

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latchkey
It is interesting how Braintree, Paypal, Stripe, WePay* all offer 2.9% + $0.30
as their pricing model for processing credit cards.

Why is it exactly the same across all of these providers?

Credit card companies must be setting their prices so that all these companies
need to compete on the same level.

What happens when one of them decides to do 2.89% or $0.29? Everyone is
fighting over portions of pennies these days.

* WePay originally had 3.5% to try to buck the trend, but even they are now moving towards the 2.9+.30 model.

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vampirechicken
Unless you process an enormous amount of payments, you're going to be dealing
with a reseller, because the banks don't want to deal directly with small
fries, and $250 million USD per year can still be seen as a small fry in the
payments industry.

So the reseller is going to mark it up a bunch. Plus, there are multiple rates
(called interchange): a plain credit card is one rate, a card with
points/miles is a slightly higher rate, a corporate card, - still higher, and
a corp card with points/miles - higher still.

That's just one card type (say MVS/VISA), there's another set of interchange
rates for AMEX, another for Discover, etc.

If you want to see this in action, talk to the people at you local bank about
processing credit cards, or call intuit about one of their dongles. The
interchange rates are part of the contracts.

The per tx fees (the $0.30 part) are built up out of several layers of the
transaction including fraud review, and there may only be a nickel of profit
built in on that side.

I think that all the providers are charging the same because they are trying
to attract small businesses (SBs) SBs are notoriously price conscious, and if
you go a tenth of a point higher, or three extra cents per tx, they'll use
your competitor. So all the processors are priced about as low as they can go,
and are trying to compete on features. They might all use the same reseller.

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Geee
Why haven't I heard of Braintree before? In every Stripe thread people are
complaining about it being US&Canada only, and I've never heard someone
suggest this instead (this works for businesses in Canada, UK, EU, AUS). Could
someone give a quick overview how Braintree compares to Stripe overall?

Edit: Well, it seems that Braintree didn't compare to Stripe's offering before
this Instant product. So, this is really great news.

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ComputerGuru
BrainTree was more of a traditional solution, requiring a separate merchant
account and a full underwriting process before approval. They also did not
have 100% flat rates.

Now the have both.

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vampirechicken
The hidden truth is that the "approval process" will have to happen before you
can move any serious money through any of these payment processors.

This comes from the Payment Card Industry, and their idea that you should
"Know Your Customer," and US Treasury Department, which has zero tolerance for
payment processors who take a cavalier attitude towards money laundering, and
they go directly after the owners of the company, and press criminal charges.

So while you're selling 100 a month, you're not really on anybody's radar, but
start processing in earnest, and they will want all of the info that a
traditional merchant account process requires.

Believe me when I say that "Instant Approval" ruffled a lot of feathers with
more traditional processors who were forced into long, involved approval
processes by PCI.

So you can start immediately at an instant approval processor, but they'll
want all the same into before you can get your money. If you search for horror
stories, you'll find lots of merchants who signed up for these services who
didn't read the fine print about their money being tied up, and complain
loudly that the processor should have told them something that important.

You can get out in front of the process with these processors by talking to
them. let them knwo that you're about to launch, or offer discounts or
whatever, so your spike in volume doesn't look suspicious. That the in-depth
approval process as soon as you can. They want to be your partner, but there
are rules and laws that they're not going to bend or break for you.

BONUS: one of the reasons that credit cards don't like to be used for
crowdsourced funding sites is that there is no guarantee that a good or
service will change hands, and therefore they have a harder time telling legit
crowdfunding from money laundering "oops, sorry guys, or idea flopped. thanks
for the $200 thousand dollars!"

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mvboeke
Michael from Braintree, here. I helped build our instant signup process.

You make an astute observation here. PayPal (and other folks who imitate their
business model) have a earned a poor reputation for servicing startups whose
businesses actually grow. Braintree has been winning clients away from PayPal
for years on this score, and we absolutely will not embrace their model.

We are actually doing something quite different with our instant approval
process. We've combined an easy signup form with years of experience and data
from working with fast-growing startups. The result is truly a full
underwriting process that helps us to understand your business, and can
approve most merchants to accept credit cards online instantly. With an
instant approval from Braintree, you will have your own merchant account and
the assurance that when your startup takes-off we will be cheering for you,
not witholding your funds.

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vampirechicken
Can you answer this question: Why do you need to look at the applicant's
credit report?

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mvboeke
For us, that's part of getting to know our client. Your question implies that
you don't think it's necessary for us to check a credit report - I would be
curious to learn why. Feel free to send me an email at
mboeke@braintreepayments.com if you want to discuss.

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onetwothreefour
Instant Approval with a personal credit check... doesn't say if it's a hard or
soft pull.

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adrianhoward
Damn. Instant is only US customers at the moment...

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klynch
Kristi from Braintree here. We're working pretty furiously to make the sign-up
experience just as seamless for our international customers. Can't offer
specific timing yet, but working hard to get there.

While the sign-up isn't quite as seamless on the international front, it is
the same great software and APIs that our US clients use. So in the meantime,
we'd love to work with you to get you up and running with us as quickly as
possible.

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jumpbug
One thing definitely not helping their cause is their crappy domain name. No
offense as I'm sure their product is lovely, but stripe has a big advantage in
terms of branding

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jmathai
In terms of branding Braintree has been around for a long time and is a very
trusted name. They're very well known for being developer friendly and having
great customer service.

I'm using Stripe right now but a brand goes well beyond the name...especially
when you're talking about financial services companies.

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jumpbug
No doubt

