PayPal would be making things worse for themselves if they did that and this purchase, is IMHO, an attempt to make things better for them and to bring them into the modern software world. I'm sure they also acquired Braintree for their engineers!
I say this as someone whose had to go through paypal's painful process several times in over a decade of use.
They have anti-fraud systems. Fine. Fucking let me talk to someone who can put their fingers on the keyboard and get it sorted out without a front page article on Hacker News, Reddit, and The Consumerist to shame them into action.
We can only hope PayPal learns something from Braintree & hopefully change them for better or they may end up like PayPal. Only time will tell.
As a business they have done great. So, Congratulations to the entire team at Braintree.
The MailPile thing happened at the beginning of this month - the fact that this can happen at all, and, as usual, nothing was fixed until that bad press started to roll in, points to a systemic problem and culture at Paypal that just changing a CEO isn't going to fix in a reasonable amount of time.
as far as topic at hand is concerned, MR from Braintree will be working closely with DM and directly. So expect only good things. Buying Braintree is a business play. (Just check out their numbers and clientele). PayPal can try to get clients like AirBnB or Uber but those startups would try every other bush before PayPal.
Hope this helps
P.S: I work for PayPal and probably one of the strong proponents of it. The above opinions are purely mine. and No i have not been canned or put in a timeout box.. yet!
On the other hand you can sign up and begin using paypal in minutes.
Yes indeedy by deferring the "very tedious verification" process until it massively impacts your business and PP has you by the balls.
People use PayPal for receiving small illicit drug shipment payments to paying their contractors to recurring payments for their service.
You cannot expect to have a great time on a service that is catering to everyone because the lowest common denominator will always ensure the organization has to be on-top of fraud and illicit activity.
I've been waiting for PayPal to do something to show that they are thinking about their long-term health and position in the market and this acquisition is exactly that. It will be interesting to see how competitors (like Stripe and Balanced) end up for this too!
They unfroze Mailpile's funds recently. That's a sign of good things.
This year Paypal expects to process on mobile twice as much as Braintree is processing as a whole.
The margins in this business are very small, .9% transaction fees on 11b are not that huge.
Where Braintree misses the opportunity is gathering better for young startups that are in the early growth phase. 100 EUR monthly minimum on .10c/trx fees is not easy to digest in the beginning.
"Interchange +.9% + €.10 per transaction. €100 per month minimum • Everything included • No additional fees". This is probably shown only to EU visitors.
I also confirmed this with braintreepayments support and their reply was: "The €100 is a monthly minimum based on a per transaction fee of €0.10. For example, if your first month of transaction charges are €68, you would need to pay an additional €32 to 'top up' the amount. Interchange + 0.90% is not part of the calculation. Only the per transaction fee of €0.10 is used to calculate the €100 monthly minimum."
When I switch the site to "United States" it reads:
"2.9% + $.30 per transaction. No additional fees • No minimums • Everything included"
Extremely annoyed by seeing this minimum applied only to the EU countries!
I would take a 100€ minimum over a 320% increase in transaction fees (2.9% vs. 0.9%) and a 130% increase in fixed per-transaction fees (0.10€ vs. $0.30 at current exchange rate) any day of the week.
With a 100€ minimum the 10c transaction fee becomes 10c only after the first 1000 transactions (1000*0.1=100). If ignoring the variable part of the fee (%) then the break-even for this 10c vs 30c transaction comparison is at ~333 transactions. For a new company it takes a long time to get the first 333 monthly paying customers.
I also doubt they'll shut down Braintree or roll it into the main product.
> It's also not that easy to just go rip out one processor
> for another on a huge legacy code base.
I've see many companies get burned by only having one. It takes ages to get another processor up and running.
It's how you say it not what it is although by my book it's still the same damn thing.
As it's been said by others here, this is certainly good for Stripe because more than a few Braintree customers will flock their way to avoid PayPal, but it also creates opportunities for other upstarts in this arena.
That being said, there is a certain amount of lock-in for these products, so while it's relatively easy for a business to transition their new users/payers from Braintree to Stripe/others, it's pretty painful to transition existing users/payers out of Braintree as all existing users would need to re-key their CC numbers and billing addresses.
 http://www.portabilitystandard.org/ (FAQ Q #1)
(Today belongs to Braintree, as you say -- congrats to all of the folks connected with the company.)
Payment processors are in the risk business -- becoming a risky account to underwrite, or their making a mistake in evaluating the risk, means you lose your account, any money that hasn't yet made it to your bank, and any customer info you have stored. Because the processor bears all the risk for chargebacks and bankruptcies of its merchants, it's an extremely thin margin business.
Spreedly is in the secure API business. They don't care much about the health of your business, the risk associated with your transactions, or anything else the processors care about. They just have to pass around messages and get paid a fee every time they do. It's a fat margin business.
The risk of losing a Spreedly account is much lower than losing a payment account. The risk of Spreedly suddenly going out of business is much lower than the risk of a small merchant account provider/reseller going out of business. And if you choose to stop relying on Spreedly, they'll hand you all your customer data (securely) to take elsewhere, which most gateways with card vaulting refuse to do. It's not a choice of who to commit to, it's freedom from vendor lock-in.
Survival of the richest not the one with better service.
I don't know if there are other investors than Y Combinator though, there might be one that will push for a sale.
We do have other investors, but (luckily) they're as uninterested in selling as we are. We've always been clear with them that we want to build this for the long-term.
From my perspective, Braintree had a good brand ( compared to paypal), locked-in customer base and sizeable cashflow (my conjecture based on their fees). Incumbents and first movers in this industry have a huge advantage over newcomers - so they were not as much at risk from newer start-ups. They were also risk averse in how they accepted new customers .
Could they not have restructured, focused on serving their existing customers rather than chasing growth, maybe downsized a bit, and gone for the long run viability with an IPO in about 5 years?
In short, when you take on enough investment, your options are IPO or acquisition, whatever makes your big investors the happiest.
So actually the VCs aimed the company to be bought by PayPal ... and succeeded. Seems that most people misunderstood Braintree's business model.
If you still think I'm wrong, please be constructive about it.
That said, maybe now with Paypal support, they will reverse their stance on crowdfunding. If not, I'm desperate for a professional payment processor that doesn't ask me to send an email if I have an issue.
You can expect the same solid customer support from Braintree as always, delivered by the same support, accounts, and risk teams. You can also expect even more innovative technology and products to come during this new chapter for Braintree. If you have specific questions about your account, you can always talk to a real person at 877.434.2894 or email@example.com.
And why the hell doesn't "braintreegateway.com" redirect to the right place?
The video interviews with Patrick are worth a look too.
Patrick is 24, his brother is even younger. I am with Stripe from the day they launched in Ireland, it was easy to choose them over the likes of Braintree and Paymill who aimed for simplicity but still required quite some formalities. Also, Paymill is Samwer brothers, a turn-off for some entrepreneurs and developers.
This seems like a good list:
[By coding against Spreedly, it's possible to do things like send all Visa and MasterCard charges to Authorize.net, and all Amex charges to PayPal for the flat rate, without ever seeing the cardholder data myself. I don't though.]
We've encountered a lot of customers that are paying much more than they should be for a merchant account and gateway setup. Stripe's fees start at 2.9% + $0.30 per transaction, we don't have any hidden fees, and we offer volume discounts for businesses on track to do $1MM/year or more. Separately, PayPal has many add-on fees ($30 per month if you want to design and host your own checkout pages, 1% cross-border surcharge, 3.5% transaction fee when your customers pay with American Express, etc.) which often make it more expensive than Stripe.
I'm remembering fees varying from $.05 to $0.10 and 0.10% to 0.15% on top of interchange. The visa interchange rates are available at (1) to give you an idea. You're mostly interested in the eCommerce categories probably, so you'll be paying 1.80 to 1.95% plus $0.10 on top of whatever you're paying from you're processor for credit cards, debit cards are cheaper.
Many people that do micropayments will try to combine some transactions together, in order to save money. That said, you might be interested in paypal micropayments (2), as they only charge $0.05 + 5%, which for a $2 transaction, is a big savings.
I've been using Paypal micropayments for the past year or so and it's been the best bet for $2 transactions (I pay 6%+$0.05 for cross border payments). Ends up being $0.17 per transaction. I haven't come across anything that beats that by a large enough margin so as to replace Paypal yet.
The only downside is that Paypal is applying the standard 6% fee to $20 transactions as well (as opposed to the lower 2.9% fee), so I either need to route these transactions to a non-micropayments Paypal account or do something else with them... this is what I am currently working on solving. The difference doesn't come out to be much for a $20 transaction but with higher transaction volume it will certainly stick out as a sore point.
But Apple would be fine with the whole App/iTunes Store being a break-even proposition since it has consistently stated that its interest is in the hardware sales.
- charging a 30% processing fee
- taking a loss on small payments
- bundling charges whenever possible
- encouraging people to buy itunes gift cards
- being big enough to negotiate better rates than normal people can.
To the limited extent that having rough numbers helps improve your estimation of what the payoff matrix is if you build a business to where it is worth $800 million: typically, the founders would split several hundred million, most employees would get $X0,000 to $Y00,000, and exceptionally early employees plus key executives (CEO, etc) walk away with a few million. The remainder (several hundred million) goes to the investors.
Braintree's numbers might be different due to their bootstrapped pre-funding trajectory or due to choices made by the founders, but ultimately their numbers are their numbers.
1. The transaction is planned between eBay and Braintree.
2. At this point eBay has plans to acquire Braintree (agreed to acquire).
Note that I'm not asking anyone from either of those companies to leak, here. Just that I'd be curious what the payout (if any) would likely be in this scenario, drawing on past models.
Especially when company B buys company A, and in turn is bought by company C.
It'll be interesting to see if large partners (GitHub, AirBnB, etc) stay onboard through the transition or if they are coerced by competitors.
1) Braintree is a dog fart compared to paypal. They certainly weren't bought for the user base. (although, their size probably probably affected the choice between stripe and bt)
2) David Marcus was acquihired from a team of 5 (a 'real startup') and has been working to startupify paypal.  Perhaps he thinks Braintree could be an example to the rest of the company.
3) Venmo is the most successful peer to peer mobile payments app. Peer to peer mobile payments will transition into wallet, and then banking. It's an important position to own.
4) Paypal's customer base is 'aging' like yahoo's has been. Braintree has a younger, hipper market segment (than paypal).
5) Stripe is cooler than braintree, but another order of magnitude smaller, plus they don't have the white-glove support of Braintree. From what I've heard, DM is continuously frustrated by Paypal's support. I believe BT's support is seen as a learning opportunity for PayPal. Also, Braintree was able to successfully copy all Stripe's innovations. Braintree has large, mature intl. presence, too.
Not an expert but thats my attempt to be 'objective'
It would be great to be able to use the same API to accept credit card and PayPal payments. I currently use Braintree for CC payments but I have to have a completely separate workflow for PayPal payments.
Balanced has been doing nothing but marketplace payments since early 2011, and have a history of coming out with the functionality most useful to marketplaces (and crowdfunders) 6-12 months before anyone else:
- Next-day payouts (same-day for WF)
- Stand-alone ACH payouts
- White-label merchant onboarding
- Dynamic soft-descriptor control
We've got a lot more coming out soon, and as an open company, you'll have a voice in exactly what we build.
That said, I'm not sure what your specific needs are, but shoot me an email at firstname.lastname@example.org and we can figure it out. Thanks!
We have two products built for marketplaces, including Stripe Connect (https://stripe.com/connect) and Stripe Payouts (https://stripe.com/blog/send-payouts-with-stripe), which differ depending on what type of marketplace you're building. Docs for Connect are here (https://stripe.com/docs/connect) and docs for Payouts are here (https://stripe.com/docs/tutorials/sending-transfers). Feel free to email me at email@example.com if you're not sure which would be the best fit for you.
I'm building a iPad POS and finally forget about provide credit card payments for my latin-america customers (except using paypal).
They had a successful exit, and for a good chunk of cash. This is a big win for the Braintree team. It's always good when people can cash out their shares.
The DOJ rightfully stopped the AT&T / T-Mobile merger in its tracks, who is to say that they wouldn't do something similar in this case?
This means Braintree is using WF as a banking service provider, but is not owned by them.
Btw, I think YC already peaked, isn't it?)