I don't know how much business you have actually done with Paypal or what you have done, but Paypal has screwed numerous good small businesses and charities with their horrid policies disguised as fraud protection. In the past 7 years I have worked with a lot of companies and done a significant amount of e-commerce work which involves payment resolution, and we almost always ran into issues with Paypal holding funds on good clients.
We had a number of clients where their marketing took months to get traction and then had an above average to explosive month only to see Paypal freeze the funds as they flagged them as "fraud". We could prove legitimate orders and had the product to ship, Paypal didn't care. One company almost went out of business because of it, luckily they were able to line up some insane interest rate loans to help cover themselves while Paypal fucked them over. Paypal doesn't care, they will sit on that money regardless of what you can prove -- did you see/read the class action lawsuit? BTW -- I personally don't have an issue with Paypal doing an initial hold when the account suddenly goes from charging say $5k/month to having a $15k or $45k month, or some variation of that, but once you can show them it is for valid orders then they should hand over the funds.
To the OP, I have no clue how Braintree is after the Paypal acquisition but I would never trust them to run my business from, solely because they are now subject to Paypal's corporate governance. One last point, I do not feel this was a Paypal employee issue, it is an executive level/corporate governance issue with how they decided to implement their fraud protection. It need not be this way as many banks and other providers have proven for years.
And they're not really fraud protection, because?
You do understand than on the internet anybody wanting to launder or cheat people from their money can set up a "charity" right?
What I have absolute contempt for is after going through business validation with Paypal (sending incorporation documents, owners details, passport copies proving US citizenship etc), proving the orders are real and even having suppliers provide signed notarized documents proving product is ready to ship, Paypal will still hold the funds. They will also ask for tax documents and many other banking documents that in all fairness they don't really need to make a determination, but they will still hold the funds. Hence, IMO, the policy stops being fraud protection when the business has proven it is legitimately charging clients for services provided or products shipping.
Paypal is a business that has frankly been totally dishonest with their customers as the lawsuit has highlighted. Which is, at least in part, why they are being forced to change their terms of service pointing out they will freeze funds for 180 days if they deem the transaction to be potentially fraudulent. A point on this, IANAL, but from how I read the findings the transaction doesn't have to be fraudulent to be held, just if Paypal "feels"/"deems" it could be, they can hold the funds for 180 days, as long as their TOS say they do this.
It also doesn't take a financial wizard to figure out that Paypal is almost surely profiting from the funds they place on hold. Just think about it, its not $50k they are holding in mass, it can be easily millions of dollars day to day that they have full control over, it is essentially a no interest loan they get to have. And do you not think it is interesting that Paypal was (don't know about now) sending out pre-approved loan emails to the very same businesses they were actively holding funds from? Seems like double dipping and a totally immoral business practice.
In fairness, I think these policies were originally created to protect consumers and implemented in good faith, but they found it to be an easy profit center which has created the problem.
2) I have done tens of millions of dollars of transactions over PayPal. I also once had my account put on hold back near when I was first going into business.
2) You are not allowed to capture funds from someone using a credit card until you are imminently shipping the product to the customer. You say "had the product to ship", but then I'm going to have to ask: how did the company "almost go out of business"? If they already have the product ready to ship, then all we are talking about here is a delay in compensation. If the company needed a loan, PayPal is not a company whom you are allowed to get a loan from, and money collected from sales is a loan until you deliver the product. Your worst-case scenario here is that you should be able to get the loan you need on extremely great terms given if you can really show to someone that you have a ton of money that will be coming to you in 180 days (and the fact that these people could not obtain a reasonable loan really then undermines the entire premise that they had good documentation for PayPal's underwriting...).
2) I am glad you have such great success with Paypal. But it isn't the truth for others, so being righteous and saying other people must be doing something wrong or illegal is just really out of touch.
3. False. The truth is simple, when product sells it has to be replaced so it is available for the next order. If demand is rising it has to be replaced in greater quantities to keep up. So yes, product is going out the door, but now there are reorder points to fulfill to maintain inventory and satisfy new orders, shipping bills which must be paid, employee wages, sales tax to governments, employment taxes, rent, insurance etc, all which must be paid well before the 180 days are up. So if money is being needlessly held for long periods, a business can easily be put in jeopardy. Most e-commerce companies don't run on huge margins, so they do not have 12 months reserves saved to work from, which is essentially what it takes if they get a 6 month hold put on their funds. Worse, if they are really growing it will take much more then 12 months of reserves, which was true for a number of the business I was working with. And no, bank loans (or even factoring) to replace/purchase product are not "easy", "fast" or "low cost" for a small business, even with proven sales traction and new orders coming in. Instead these loans are generally treated as moderately high to high risk.
My point about Paypal and their offering loans to the same people whom have had funds held, stands separately and on its own. It is a horrid business practice and while not illegal that I can imagine, it sure does seem immoral. Again, I do not know if they are still doing this today, but you can search google and find examples within the last year of it taking place.
I really do hope you continue to have success with Paypal and your business. I also hope Paypal stops their "held funds" behavior as it relates to small businesses and give people their funds timely. I do not think it is too much to ask, banks and other clearing houses do it everyday and still provide solid fraud protection for everyone involved. As for anyone who asks me, I will continue to steer them to any provider other than Paypal, until I see that Paypal has made a change in reality not just in media speak.
I also happen to know a lot of people that run Ebay businesses that have had a variety of legitimate issues with Paypal.
I was integrating Braintree a year ago when some of the documentation was unclear. They're technical support was amazing on the phone, and cleared anything the documentation was lacking up.
Also, talking to them wasn't like talking to a tool. Didn't feel like a megacompany, but just another person on the other side of the line.
Plus, they offer a great deal for startups, which get no fees for up to 50K in specific countries.
Post paypal acquisition I really haven't noticed any differences.
I looked at Braintree before the acquisition and they seemed really cool. I was able to hang out in their IRC chat room and watch them work.