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Boy, everyone is so negative about the purchase on here! Braintree's customer base is far too large at this point for PayPal to just shut it down; that would be

by Ixiaus 13y ago

Boy, everyone is so negative about the purchase on here! Braintree's customer base is far too large at this point for PayPal to just shut it down; that would be terrible PR because Braintree is critical to many businesses at this point. It's also not that easy to just go rip out one processor for another on a huge legacy code base. 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!

AhtiK 13y ago
Braintree processes ~11b/year. Paypal ~$145b/y. 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.
- gaadd33 13y ago
  Where did you hear that Braintree is going to a 100EUR monthly minimum?
  - AhtiK 13y ago
    https://www.braintreepayments.com/ https://www.braintreepayments.com/ "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!
    - Aloisius 13y ago
      > 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.
      - AhtiK 13y ago
        Unfortunately it's interchange + 0.9%, not just 0.9%. Interchange ranges ~1.2-2% so the difference gets much smaller. 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.
- pjg 13y ago
  FYI: Of the total Paypal is processing i.e. ~145B/year only half is Paypal branded i.e. appx $70-80B/year, the rest of it goes through Verisign gateway
wslh 13y ago
I don't know about the future of Braintree but I know that this acquisition is bad for the e-commerce market. It's an irony that companies challenging the status quo end being part of it.
gilrain 13y ago
Yes, and PayPal definitely has a history of not upsetting its customers, avoiding negative PR, and not making things worse for themselves. We can certainly bet on them to handle this acquisition in a reasonable way.
- badclient 13y ago
  Show me a company working as a purely Internet bank of sorts and I'll show you a company with pissed off customers. Truth is, this business is very hard. For every time Paypal misidentifies a target and blocks their payments, they correctly identify scammers many more times. We tend to think "is it that hard to tell a scammer from blah legit site?". The answer is yes because guess what scammers are thinking everyday when they wake up? They are thinking 'how can we look more like a legit business so our payments go through'. I say this as someone whose had to go through paypal's painful process several times in over a decade of use.
  - dangerlibrary 13y ago
    Ally Bank seems to be doing pretty darn well...
    - badclient 13y ago
      Ally Bank also makes your account next to useless until you go through a very tedious verification process from the get go. In my case, they mailed me some documents that unsurprisingly I never ended up bothering with. On the other hand you can sign up and begin using paypal in minutes.
      - noir_lord 13y ago
        > 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.
        13y ago
neovive 13y ago
I definitely agree. Contrary to the negative perceptions, there is a major opportunity to market the BrainTree service to eBay's small to mid-size merchants along with other services as part of a professional ecommerce store-in-a-box approach. eBay can bundle every aspect of the sales funnel from customer acquisition through actual credit card purchase. BrainTree could also be used as a replacement for PayPal Payments Pro.
amorphid 13y ago
I'm with you Ixiaus. Congrats to everyone everyone at Braintree!
xofer 13y ago
> It's also not that easy to just go rip out one processor > for another on a huge legacy code base. Unfortunately true. It's always a good idea to support more than 1 processor, ideally all used actively. I've see many companies get burned by only having one. It takes ages to get another processor up and running.
- knighthacker 13y ago
  Using more than one payment processor is definitely a smart move. Not only to avoid unpredictable consequences such as this acquisition, but also because it will give you a negotiating advantage as payment processing becomes more and more of a commodity.
  - ante_annum 13y ago
    From an engineering perspective at my last job, having multiple also allowed us to abstract away the processors themselves into ways that made adding a new one pretty painless. If one went down, we just failover seamlessly.
timdorr 13y ago
They've bought payment providers in the past. The last big one was Verisign Payments and they've kept that running as a separate product since 2005! https://www.paypal.com/cgi-bin/webscr?cmd=xpt/Marketing/general/VerisignFAQ-outside https://www.paypal.com/cgi-bin/webscr?cmd=xpt/Marketing/gene... I also doubt they'll shut down Braintree or roll it into the main product.
- pjg 13y ago
  The key to note about Verisign purchase is that of the appx. 1/2 of $145B/year volume that paypal processes is through the verisign gateway which is not paypal branded. Verisign payments are about half of total so it was a good acquisition
asabjorn 13y ago
I agree that it is still too early to tell if something good will come out of this or not. I am especially curious if Braintree customers will get access to PayPals superior transaction risk assessment technology. That might be huge for people that use Braintree for marketplaces.

by Ixiaus 13y ago

AhtiK 13y ago

Braintree processes ~11b/year. Paypal ~$145b/y. 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.

gaadd33 13y ago
Where did you hear that Braintree is going to a 100EUR monthly minimum?
- AhtiK 13y ago
  https://www.braintreepayments.com/ https://www.braintreepayments.com/ "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!
  - Aloisius 13y ago
    > 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.
    - AhtiK 13y ago
      Unfortunately it's interchange + 0.9%, not just 0.9%. Interchange ranges ~1.2-2% so the difference gets much smaller. 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.
pjg 13y ago
FYI: Of the total Paypal is processing i.e. ~145B/year only half is Paypal branded i.e. appx $70-80B/year, the rest of it goes through Verisign gateway

wslh 13y ago

I don't know about the future of Braintree but I know that this acquisition is bad for the e-commerce market. It's an irony that companies challenging the status quo end being part of it.

gilrain 13y ago

Yes, and PayPal definitely has a history of not upsetting its customers, avoiding negative PR, and not making things worse for themselves. We can certainly bet on them to handle this acquisition in a reasonable way.

badclient 13y ago
Show me a company working as a purely Internet bank of sorts and I'll show you a company with pissed off customers. Truth is, this business is very hard. For every time Paypal misidentifies a target and blocks their payments, they correctly identify scammers many more times. We tend to think "is it that hard to tell a scammer from blah legit site?". The answer is yes because guess what scammers are thinking everyday when they wake up? They are thinking 'how can we look more like a legit business so our payments go through'. I say this as someone whose had to go through paypal's painful process several times in over a decade of use.
- dangerlibrary 13y ago
  Ally Bank seems to be doing pretty darn well...
  - badclient 13y ago
    Ally Bank also makes your account next to useless until you go through a very tedious verification process from the get go. In my case, they mailed me some documents that unsurprisingly I never ended up bothering with. On the other hand you can sign up and begin using paypal in minutes.
    - noir_lord 13y ago
      > 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.
      - 13y ago

neovive 13y ago

I definitely agree. Contrary to the negative perceptions, there is a major opportunity to market the BrainTree service to eBay's small to mid-size merchants along with other services as part of a professional ecommerce store-in-a-box approach. eBay can bundle every aspect of the sales funnel from customer acquisition through actual credit card purchase. BrainTree could also be used as a replacement for PayPal Payments Pro.

amorphid 13y ago

I'm with you Ixiaus. Congrats to everyone everyone at Braintree!

xofer 13y ago

> It's also not that easy to just go rip out one processor > for another on a huge legacy code base. Unfortunately true. It's always a good idea to support more than 1 processor, ideally all used actively. I've see many companies get burned by only having one. It takes ages to get another processor up and running.

knighthacker 13y ago
Using more than one payment processor is definitely a smart move. Not only to avoid unpredictable consequences such as this acquisition, but also because it will give you a negotiating advantage as payment processing becomes more and more of a commodity.
- ante_annum 13y ago
  From an engineering perspective at my last job, having multiple also allowed us to abstract away the processors themselves into ways that made adding a new one pretty painless. If one went down, we just failover seamlessly.

timdorr 13y ago

They've bought payment providers in the past. The last big one was Verisign Payments and they've kept that running as a separate product since 2005! https://www.paypal.com/cgi-bin/webscr?cmd=xpt/Marketing/general/VerisignFAQ-outside https://www.paypal.com/cgi-bin/webscr?cmd=xpt/Marketing/gene... I also doubt they'll shut down Braintree or roll it into the main product.

pjg 13y ago
The key to note about Verisign purchase is that of the appx. 1/2 of $145B/year volume that paypal processes is through the verisign gateway which is not paypal branded. Verisign payments are about half of total so it was a good acquisition

asabjorn 13y ago

I agree that it is still too early to tell if something good will come out of this or not. I am especially curious if Braintree customers will get access to PayPals superior transaction risk assessment technology. That might be huge for people that use Braintree for marketplaces.