Bootstrapped, Profitable, & Proud: Braintree | Hacker News Reader

Bootstrapped, Profitable, & Proud: Braintree

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110 pointsbenmills25 comments

He took a few days off work and flew out to Utah, where his old customers resided. He asked them if they’d switch their processing to his new company, Braintree.

Every company I've worked at has strictly forbidden this kind of thing via a noncompete agreement. Essentially, it's in the name: "Noncompete Agreement"

Be careful what you sign, and be mindful of what you have signed in that past!

This is Bryan from Braintree. I was working for a different company at the time I visited my former customers. I honored the one year non-compete I had with my former employer.

Out of curiosity, did you catch any flak from former colleagues? I can imagine many people would still be quite angry, even if you fulfilled your legal obligation.

No, I didn't.

For anyone who hasn't used them yet, it's the one-stop-shop and their API that really sets them apart from the competition. You submit one set of paperwork and they take care of all the accounts: merchant, gateway and api. No need to chase down different accounts and get them all working together.

The fantastic API literally saved hundreds of hours of integration and build time, as the recurring billing, discounts and everything is completely programmatic and just works.

I just signed up within the last few weeks and throughout the whole process I could tell they built it up with developers in mind, not as an afterthought.

Well, the convenience sure does sound nice, but the rates are staggeringly high:

V/MC Non-Qualified: 2.89% + $.30

Cybersource+WFB clocks in at roughly half that for V/MC( although Amex rates are around that level ), with per-transaction at 10 cents or less.

If that’s the case, they’re losing money on your account because that pricing is below the wholesale bank costs (which is the same for everyone). You probably want to check the fine print or your monthly statement.

Our (Braintree) pricing is actually very competitive. It may look higher because we disclose all our fees. Nearly every provider we know obscures fees both during the sales process and in the monthly reporting statements so merchants never really understand what they're paying. Here's an example of pricing trickery http://www.braintreepaymentsolutions.com/blog/Costco-your-ma...

There is no way that Cybersource + Wells Fargo is charging 1.45% for non-qual transactions. More likely they are doing something called Marking Up the Downgrades http://feefighters.com/blog/marking-up-the-downgrades/ where they quote a low "qualified" rate that only applies to a small minority of transactions.

The wholesale rates for credit card processing (called interchange rates) are available online at visa and mastercard's websites (search for "visa interchange rates"). Without getting into details, all card-not-present transactions, regardless of card type, are more than 1.45%.

Braintree's pricing is not the lowest, but I bet if you looked carefully at your statement from Wells you would find that it is worse than Braintree - some of the worst processing deals I have ever seen are from Wells Fargo.

If you want to make sure that your processor is not pulling funny business with downgrades, insist on Interchange Plus pricing (http://feefighters.com/blog/interchange-plus/). Or just a completely flat rate with no downgrades.

And then monitor it closely, this is one of the most crooked industries on the planet.

"Who are the customers Braintree decided to write off? “It was a fool’s errand to try selling medicine to those who hadn’t yet experienced pain. Payment processing is complex. It’s difficult for inexperienced merchants to recognize value. We’d spend countless hours trying to explain ‘pain’ and our cure but some just didn’t care because they hadn’t felt it yet...'"

That's money right there. And noted for the future of my business. People will pay for you to take away the pain of their bad experiences with an inferior service/product.

Perverse idea/thought experiment: what about creating two versions of some service X which are ostensibly competitors; one is a free/cheap version A with no support and one is a much higher-priced, supported and professional version B. The answer to support requests on A would mostly be "no", with the occasional "if you want that, use service B". Sort of an extreme take on freemium/market segmentation. A acts simultaneously as the top of a funnel for B (users who actually need the service and have experienced the pain of a bad offering) and as a screen for bad customers (the ones you'd "fire" for consuming more than their fair share of your resources).

I vaguely remember that in my previous career in grocery management that diaper companies did something similar. I don't remember the brands/companies, but one brand would be positioned at the high end while another was at the low end. The high end had all the 'features' - moisture sensors, velco tabs, etc. This allowed the one company to garner more shelf space, and thus eyeballs, which brought higher market share.

Market segmentation is a common tactic. Different consumers want different things and are prepared to pay different prices. They will however lump together anything under the same name.

So, for example, Cheap'n'Nasty Nappies Co may have done very well in the bottom market segment. It will now struggle in the higher segment unless it invents a new brand, say Bling Slings Nappies, with some ostensible differences ("6 layers of plastic!") and a much higher price.

You will see this practice in every industry with large firms. They will own multiple brands in multiple market segments.

That's a pretty common strategy for Open Source companies. For example, Magento (OpenSource PHP e-commerce solution) is free, with no support. Then there's the full-on enterprise edition at 10 000 Euros per server where you get complete support from Magento Inc, including guaranteed revenue in case Magento fails.

Pain is not built-in though, but close.

reminds of how "protection" services were being sold in Russia 15-20+ years ago : once "A" branch of the protecting organization visits you today, tomorrow - you're are a happy paying customer of the "B" branch. Bad cop, good cop.

Oh how I wish Braintree was accessible in Canada. We've haven't been very pleased with our payment processor as of late.

About a year ago I actually managed to get someone from Braintree talking with someone from Chase Paymentech Canada (since Braintree supports Chase Paymentech). Unfortunately, BT is integrated with CP Salem whereas CP Canada only processes through CP Tampa.

If anyone has tried to do this in the last year and succeeded, please comment.

We (Shopify) use braintree and are customers of Chase Paymentech. This is how we collect all our fees.

But I imagine you have a US domiciled merchant/bank account correct?

If you're doing that with a Canadian based merchant account, please send your account rep's info at CP or BT.

beanstream in canada is actually quite good, easy to setup, low fees, and has a good api (credit card data stored on their server). i looked at braintree, but couldn't use them b/c of canadian merchant. beanstream also lets you do funky things with canada/us currency (collect and settle in us funds, settle in US banks, etc.)

Tyler - We're getting ready to launch in Canada... In a couple of weeks you should be able to use http://feefighters.com to compare payment processors apples-to-apples!

I'm excited to give Braintree a go someday, but what I really wish is that someone would come up with a system that was orthogonal to and independent of the existing banking system.

The banks and the regulations make all real credit card processing a major PITA, and while Braintree eases the process, they are not an exception as far as I can tell. They still have to underwrite and they still have to vet accounts for underwriting. If you have bad credit or anything else that would prevent you from getting a loan, you're not going to be able to process cards without PayPal, which means it's difficult to bootstrap yourself out of a bad situation.

One of the main reasons I think Bitcoin is cool is because it's a great experimental platform for this kind of stuff.

True, banking fees really do take up a significant post in the P/L, and the smaller you are, the more you're paying, why it's not optimal for startups. A startup bank would be a cool idea.

These guys are awesome—they power all our payments. The one thing I wish they could somehow add support for is outgoing EFT/ACH transfers.

We do have one funny story about them from Getaround... one night, early in the morning, we got a call directly from their CEO. Apparently we had written some bad code that was just hammering their servers—basically, we were accidentally DoSing Braintree.

Got it fixed up quickly, and have loved them and used them ever since!

Love me some Braintree!

Their API & API Documentation are fantastic.

While this is valuable, it is really a company that shouldn't exist - banks needs to be forced to use a standard API and be barred from abusing their government monopoly.

Am currently in the process of an application, so far their speed and quick understanding in meeting the needs of my solution has been first class.

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