Tell HN: Braintree is no longer startup-friendly | Hacker News Reader

Tell HN: Braintree is no longer startup-friendly

65 pointsjjeaff14 comments

About 3 years ago, after researching payment processing options, we chose Braintree. The thing is, they were still riding on the goodwill they had built up thus far pre-paypal purchase.

Paypal is a total nightmare for some people (especially if you plan on growing fast), so the fact that they were recently purchased by them, should have been a red flag, but customers and reviews still seemed positive.

One of the selling points with Braintree was always that once you are underwritten, they are going to work and grow with you. Unlike Paypal, who will arbitrarily freeze your funds at the most inopportune moment.

Apparently, Paypal has now applied this same policy at Braintree. One of the features we offer our customers is allowing them to sell event tickets through our software. They can use their own merchant account, but we encourage them to use our in house system (braintree marketplace) because it is usually faster and easier.

And so it worked fine for 3 years, slowly growing, processing more and more payments through more and more sub-merchants. Hundreds of thousands of dollars. Then they just decided to shut down 2 of our newest customers and hold 100% of their funds ransom for 180 days. More than $50k for a single customer which is a terrible burden. Reasons given was that we had a sudden increase in marketplace sales from this new customer and they don't want the exposure (even though we processed even more than this from a single sub-merchant last year in a short period of time).

So just wanted to put it out there that Braintree is now up to the old tricks of Paypal. Lull you in to a false sense of security, then lock up your funds suddenly for whatever reason with no recourse.

If you currently use Braintree, be careful, even with a good growth history on file with them, they are no longer startup friendly as they can't seem to handle spikes in activity or at least have no desire to do so.

Braintree was acquired years before you started using them, so the PayPal-interference angle doesn't really play. The only thing surprising is that you're in the business of facilitating event ticket sales and weren't expecting and prepared for this. Pre-selling anything is very high risk for the underwriting bank, especially events: if the event is poorly planned or doesn't get put on, and the organizers have spent the money or disappeared, they can end up on the hook for hundreds to thousands of chargebacks. One failed event can take down a small payment processor, as their chargeback ratio will be decimated. It's pretty much guaranteed to take you out if you're letting them sell through you. The fact that you had other customers with events that went successfully in the past doesn't reduce the risk for the next guy's event. This situation was inevitable, and that will be the case no matter what processor you work with, as they're virtually all underwritten by the same dozen or fewer banks in the end... often the same two banks that underwrite PayPal's card processing. My advice: unless you can get to Eventbrite scale, vet event organizers well, and limit the size of events you sell tickets for, don't be an intermediary for event ticket sales. Make them bring their own payment accounts for any event where 100% of sales getting charged back would be more than 1% of your monthly volume.

I wonder if Braintree warned their customers that they will be changing their operations / policy and gave fair warning before flipping the switch.

It takes time for an acquiring company to sink its talons in. Braintree assured us upon signing up that they were completely independent and would continue to operate the same as always. It was naive to believe that of course.

We had 3 years of processing events in our very niche space where each of our organizers that sell tickets are licensed, bonded, and fingerprinted, registered with the SEC and have an active profile on FINRA (because they are licensed to sell securities) that shows so much as a credit card default when it come to financial impropriety.

The real problem with Braintree is that they were not open and upfront about their policies and even misleading at times. If certain levels of ticket sales would be too risky for them, then they should have told us those limits up front, rather than waiting until sales were high and then freezing the account and holding the money.

As for your advice, I agree, that is our plan moving forward. We will only process small events in house and require people to get their own account otherwise.

As someone in the payments industry, event tickets are very risky. You can sell event tickets, get paid. The events is far out in the future and all is well, then on the day of event you're a no show and the chargebacks starts rolling in. If you can't pay it, then the processor eats it.

Can’t you use a payment system that doesn’t allow chargebacks?

Not if you want people to attend. Cash, wire transfer, money order & crypto aren’t how people buy tickets ahead of an event.

In the U.S., you mean. I've seen plenty of events (usually professional conferences) that have to be paid in cash or wire transfer here in South America.

I've never actually bought tickets with PayPal. It's acceptable in a lot of places. Then again, the tickets I buy aren't over $25.

> Then they just decided to shut down 2 of our newest customers and hold 100% of their funds ransom for 180 days

So Braintree supports payments through a number of providers, credit cards and PayPal, Apple Pay, etc. When you say they hold 100% of their funds, is this for PayPal payments via Braintree, or is it also credit card payments (i.e. payments directly to Braintree)? In other words, are the 100% fund you mention stored at PayPal?

The reason I'm asking is because Braintree does credit card disbursement a couple of days (or something like that) after a credit card payment has been performed. So if they shut a customer down, wouldn't they "only" hold the money from the first transaction after the last payout, till the shutdown occured? In other words, if the last payout from Braintree happened on Monday, and there was another transaction on Tuesday due to be paid out to the merchant by Braintree on Thursday, and Braintree shut them down on Wednesday, this would mean the "100% funds" mentioned is the transactions happening on from Tuesday till Wednesday, since they were shutdown on Wednesday?

I hope the question make sense! Just trying to make sense of this :-) (using Braintree as well, but not Marketplace)

After reading the horror stories related to Paypal, I personally do understand why anyone would use them other than for VERY casual/inconsequential transactions. Sorry to see this spread, but it seems reasonable to assume it would following the purchase.

What are the alternatives, besides asking for a credit card # via Stripe? From customers point of view, it's simply easier & safer to pay with PayPal.

PayPal is horrible. They acquired Braintree and now Braintree has become horrible. They are now acting like established banks, and that is why startups like Stripe kicked them in the proverbial behind. PayPal nor Braintree is is startup friendly. Stay away from both.

I've always been really wary of PayPal because of all the stories like this. Freezing 100% of funds is a really scary thing.

I am using Braintree for years and never had any issues, Support is really great as well.

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