PayPal nears deal for Braintree Payments

http://blogs.wsj.com/digits/2013/09/22/paypal-nears-deal-for-braintree-payments/

by minouye • 13 years ago

53 53 13 years ago

blogs.wsj.com

codex• 13 years ago

PayPal and Square are engaged in a pitched battle to win mobile and small-shop business. Square does about 10% of PayPal's volume.

1123581321• 13 years ago

Congratulations to the shares and options holders, but that is too bad. My first introduction to Braintree was this Profitable & Proud article from 37signals[1]. Braintree's principles of providing exceptional service both to business people and developers, their work to improve the overall industry, and their concern for the people employed by them will probably not survive being merged into PayPal.

1 http://37signals.com/svn/posts/2800-bootstrapped-profitable-...

ciokan• 13 years ago

Too bad. I had nightmares with Paypal and always considered Braintree as a viable alternative. I'll be switching off soon.

t0• 13 years ago

But wont most of Braintree's customers jump ship rather than deal with Paypal? They're effectively killing it by buying it.

pbreit• 13 years ago

No. That line of thinking is incredibly tired.

tomlu• 13 years ago

Why not? We switched from PayPal to Braintree explicitly because PayPal was too broken for our use case. Is there some indication to expect that Braintree won't be integrated into the rest of PayPal in the case of an acquisition?

bengotow• 13 years ago

I think he's got a point - users won't jump ship because Braintree (and Venmo) are now PayPal products, they'll jump ship because PayPal ruins them with fees, long payout times, etc...

kintamanimatt5• 13 years ago

Aren't you a PayPal (or ex-PayPal) employee? Surely you might have a little bias here!

palidanx2• 13 years ago

As a braintree customer, this deal does give me cause for worry since I jumped to Braintree because of paypal.

However realistically, since all of our production code is already completed and tested against Braintree, we are not going to switch unless they do something really dumb like close their api.

For me as long as Braintree continues:

+ Using their 'vault' for credit cards

+ Continues having a great api

+ Continues have great customer service.

I'm going to watch and see what happens.

Aqua_Geek2• 13 years ago

I worry that PayPal might change the “Take your vaulted cards to another processor” policy…

If they do, it’s going to cause a lot of headaches for customers.

tzs• 13 years ago

They're effectively killing it by buying it.

I don't see how you come to that conclusion. This is not the first time PayPal has acquired a popular payment processor. In 2005, they purchased Verisign's payment processing business, Payflow Pro. I don't recall them making any noticeable changes to it after acquisition other than changing the word "Verisign" to "PayPal" everywhere. Is there some reason to believe that a Braintree acquisition will not be treated similarly?

thethimble• 13 years ago

Absolutely. Companies approach Braintree because they want a no-bullshit payments processor. Based on PayPal's past antics it hardly it hardly has the reputation for which people seek Braintree.

I think this is the perfect opportunity for Stripe, and other payments processors that cater to younger more progressive companies, to get some clients to jump ship.

goronbjorn• 13 years ago

As with all acquisitions, if they give them a healthy amount of autonomy and give them more resources than they would've had as a startup, then I can see this going pretty well. Huge and improbable "if", but it's worth pointing out.

andrewhillman• 13 years ago

One day a payment company will refuse to be acquired and give paypal a run for their money. Paypal fees are just too expensive and I have to believe there's a company who will want to disrupt and take on Paypal rather than succumb to them.

kintamanimatt5• 13 years ago

PayPal's problem isn't so much their fees (although that's an issue) but their utter disregard for their customers. The fact they'll arbitrarily freeze an account for seemingly nothing more than shits and giggles is counter to the kind of stable experience you'd expect and want from a payment provider. The fact there is little recourse when the fuckup fairy strikes is what's most concerning though.

bigiain2• 13 years ago

It might be that this is indicative of the core value of Paypal's fraud prevention intelligence. All the smart people I know who work at Paypal are working on fraud prevention (even the analytics guy I know there admits to providing more data to the fraud prevention teams than anybody else).

I wouldn't be very surprised if Braintree decided to be acquired because they learned that doing "enough" fraud protection requires the sort of fees that Paypal charges – _plus_ a dataset like eBay to mine for patterns and to instrument up for real-time triggers.

Thinking about it (as in, this is not some long-held considered belief, just some random thought that's just popped into my head), it'll kinda surprise me if anyone smaller than Paypal/eBay, Amazon, Facebook, or Google, will be able to compete longterm as a payment company. If you don't have firehose-sized transaction data to monitor (Paypal/Amazon) or strong social network signals about identities (Facebook/Google), I doubt you're going to be able to create fraud protection as effectively as those players, and that's going to cost you and your (non-fraudulent) customers and be reflected in the transaction fees you'll end up non-competitively charging.

Random thought number 2 – I wonder if there's now some opportunity to start up a non-US based payment company, and lobby for privacy law changes in the wake of the post-Snowden knowledge about how the PRISM-linked companies are mis-using personal data, especially of "non US persons"? I wonder how hard you'd have to push the Brazilian government to make using PRISM-linked or US based companies as payment services illegal - for domestic privacy reasons? (Unfortunately, I suspect the opportunities for me in Australia to lobby for laws protecting Australian citizens from surveillance by the NSA won't get any support at all from our in-bed-with-and-beholden-to-the-US government.)

ximeng2• 13 years ago

There could be ways round the big-data-required problem. You could charge different transaction fees depending on how good your data is on somebody and allow them to provide data to improve your confidence in them. Or require deposits from people and return them over time.

the_watcher8• 13 years ago

I get their fraud protection focus. A huge reason they stay around is that you can use them without a merchant ID, which banks are a lot more hesitant to hand out these days. However, Stripe, and more recently, Shopify Payments, offer the same advantage without the PayPal-ness.

marcamillion2• 13 years ago

I would love to hear DHH's thoughts on this because:

a) He recommended Braintree from Day 1 as an interesting payments company.

b) He liked that they were Bootstrapped.

c) They took a lot of funding and that seems to have gone sour.

d) They are being acquired - in what looks like a desperation sale.

e) They are being acquired by Paypal - which I am sure I have heard him hate on.

If he will talk publicly about this...that would be quite interesting.

I imagine now, he may consider moving all his payments to Stripe.

rexreed• 13 years ago

Interesting - can you provide sources for b, c, d? In particular, isn't b) and c) contradictory? Just want to read more on this - not trying to be adversarial.

jd• 13 years ago

Although I don't know the specifics for Braintree, it's not contradictory to accept VC money for bootstrapped companies. If a startup goes from 0 to 10M revenue without taking any outside investment then that puts them squarely in the bootstrapped camp. However, if they then realize they're in a winner-takes-all market and that they need a lot of money in order to scale up, then they can still accept VC money at that later stage.

chinmoy• 13 years ago

BrainTree has been bootstrapped since it's beginning until October, 2012 when they raised $35 million. And the guys at 37 Signals sure love BrainTree since, that is what they use to process payments for 37 Signals. Also, BrainTree was featured in their famous 'Bootstrapped, Profitable and Proud' series http://37signals.com/svn/posts/2800-bootstrapped-profitable-...

bready3• 13 years ago

I'm CEO at Braintree. I'm not going to comment on any of the rumors that are being circulated. I will tell you that we won't do anything that would compromise our product or our service. We are all fully committed to that. More on that here --> https://www.braintreepayments.com/blog/more-committed-than-e...

dxhdr• 13 years ago

Why so defensive? You clearly are commenting on the rumors... just sayin'. Cool company by the way! Sounds like you've had a lot of success. Paypal isn't very cool, though...

the_watcher8• 13 years ago

> Paypal isn't very cool, though...

That's where the defensiveness comes from. I love Venmo and do not like PayPal. Coming in here helped make me feel a bit better about this potential merge.

thaumaturgy• 13 years ago

I will tell you that we won't do anything that would compromise our product or our service.

Wouldn't be the first time someone said that prior to being acquired, only to realize later that they do not have the influence over upstream decisions that they imagined they would.

bready3• 13 years ago

I'm no babe in the woods. I've been through multiple acquisitions in the past as well as multiple funding rounds. With either you run risk of meaningful changes for employees and customers if you don't choose well and structure properly. Lots of founders and CEOs take the cop-out of "I didn't know." You won't find any of that here.

When I give my commitment and my word that we won't do anything that would compromise our product or our service, I do so with eyes wide open. Again, I'm not making any statement about the rumors that others are fueling. However, I do want to be very clear about our principles and the fact that everything we do will be driven by our commitment to deliver great products and fantastic service to our customers. That means I’d have to be very confident in our ability to do that for any path we choose – with no cop-out of “I didn’t know”. There will be no deviation from that – you have my full commitment on that.

esw• 13 years ago

Hi Bill. I've only been a customer for a few years, but I've been super impressed with the level of customer service. If I have an API question or a problem, I always get a real, human, thoughtful answer - not a copy/paste from the documentation that I've already read.

So while I understand the necessity of the linked blog post, it doesn't really address my concern - which is that PayPal has notoriously awful customer service, and the thing I value most about your company is your customer service. And despite all of your best intentions, the culture of very large companies inevitably affects (or replaces) the culture of the companies they acquire. I've been acquired before. I know how it goes.

At the end of the day, all I care about is that I continue to get the same level of customer service from your company. The moment that changes, I'll go somewhere else (probably Stripe).

bready3• 13 years ago

Customer service is absolutely part of the commitment. It's a huge part of why we've had such phenomenal growth and have so many fantastic clients. We are absolutely intent on delivering that for years to come and wouldn't consider anything that would degrade our service. More on that in my response above.

bkirkbri• 13 years ago

Bill, I have the utmost respect for Braintree. But if this rumor is true, all I can say is "famous last words." PayPal have demonstrated an inability to operate competently.

And we just notified our entire customer base that they can kiss their Paypal problems goodbye because we've switched to Braintree. How does that look now?

I have my fingers crossed that this sale does not go through.

frank_boyd• 13 years ago

Seems like an inevitable downgrade to me - real pity.

Also, as always, less competition means a worse overall offer for devs.

dcc12• 13 years ago

Good thing i stayed away from braintree, paypal be a perfect match for them considering both are shit

teh_klev• 13 years ago

Thank you for that low brow insight gem.

dcc12• 13 years ago

My business nearly went under because of SHITPAL

how is that for an insight?

AdamN• 13 years ago

I think it's great for braintree if they get acquired by PayPal. Unfortunately, I won't use their service since PayPal is one of the worst run companies I can think of aside from eBay. The CEO of Braintree doesn't control the company, the majority shareholders do (and in this case it sounds like it will be PayPal).

the_watcher8• 13 years ago

> PayPal is one of the worst run companies I can think of aside from eBay.

Probably related.

jbrooksuk• 13 years ago

I'm so glad I didn't use Braintree now. Thank you Stripe for opening the UK Beta at just the right time back when.

Felix21• 13 years ago

If stripe was a public company, their share price would increase today and even more-so when this is official.

PayPal nears deal for Braintree Payments

Related Stories