Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

Braintree Is On The Block, Had Acquisition Talks With Square And PayPal

techcrunch.com

Post reply on HN
Print view View original

31–40 of 60 posts

Re: Braintree Is On The Block, Had Acquisition Talks With Square And PayPal

#31

Post by abalone »

kloncks wrote: post #4
nonchalance wrote: post #3

Earlier quoted context omitted.

> More recently, it had been in acquisition talks with Square, which also fell through, possibly because Braintree is asking for too high a valuation. > According to industry sources, Braintree has been asking for $1 billion, which seems unrealistic. It would seem that other suitors are trying to pressure Braintree to lower their target

Square processes $10b. BrainTree processes $10b. How is Square valued at $4b and BrainTree can't sell for $1b?

Square probably has better gross margins than Braintree because they target a different market: small businesses.

The value Square adds to that market is much more substantial: free POS system, mobile wallet app, promotion in their marketplace, Jack Dorsey's autographed photo, etc.

Braintree (and Stripe) target ecommerce startups. Their value-add is streamlined APIs and tailored customer service. That value-add is nice but relatively smaller and less scalable to boot. As soon as those sites get big they will negotiate for lower rates they can get from a commodity processor. No doubt the big customers in their portfolio already have and we just don't know it.

Square's got a whole world of small business to expand into, a much larger market than ecommerce startups. And their margins are more sustainable; it takes an awful lot of growth for a merchant to justify switching out all their POS systems and other Square lock-in, just to shave a few basis points off their processing rate.

Re: Braintree Is On The Block, Had Acquisition Talks With Square And PayPal

#32

Post by joeblau »

aquark wrote: post #27
beachstartup wrote: post #21

we use braintree and it works fine. wouldn't mind staying, or 'switching' to square. if paypal acquires them, we'd probably switch to square.

Do you mean square or stripe? I don't see how Braintree and Square are interchangeable for anything other than physical point-of-sales use cases ... which doesn't seem like Braintree's sweet spot

I think he/she means Stripe :)

Re: Braintree Is On The Block, Had Acquisition Talks With Square And PayPal

#33

Post by [deleted] »

cperciva wrote: post #19
ajsharp wrote: post #18

Anyone building a card processing business is going to have trouble finding long-term cash flow because the margins are razor thin. For example, Visa processed $6.7 trillion in transactions and made $10.4bn in revenue . I'd rather do business with someone like Balanced, who has a larger product vision than "well paypal sucks".

the margins are razor thin. For example, Visa processed $6.7 trillion in transactions and made $3bn in revenue. I don't care how thin the margins are, I'd love to have $3B of revenue.

[deleted]

Re: Braintree Is On The Block, Had Acquisition Talks With Square And PayPal

#34

Post by sologoub »

ajsharp wrote: post #18

Anyone building a card processing business is going to have trouble finding long-term cash flow because the margins are razor thin. For example, Visa processed $6.7 trillion in transactions and made $10.4bn in revenue . I'd rather do business with someone like Balanced, who has a larger product vision than "well paypal sucks".

Not sure that's a good comparison. They are basically a merchant account as a service. Retail rate is 2.9% + $0.30. Businesses with strong transaction history and good volumes can get much lower than that from the traditional providers.

The merchant account business has higher numbers than Visa processing business.

Re: Braintree Is On The Block, Had Acquisition Talks With Square And PayPal

#35

Post by beachstartup »

joeblau wrote: post #32
aquark wrote: post #27

Earlier quoted context omitted.

Do you mean square or stripe? I don't see how Braintree and Square are interchangeable for anything other than physical point-of-sales use cases ... which doesn't seem like Braintree's sweet spot

I think he/she means Stripe :)

i mean square - that's the company that's looking to buy braintree, right? am i seeing things?

Re: Braintree Is On The Block, Had Acquisition Talks With Square And PayPal

#36

Post by ajsharp »

sologoub wrote: post #34
ajsharp wrote: post #18

Anyone building a card processing business is going to have trouble finding long-term cash flow because the margins are razor thin. For example, Visa processed $6.7 trillion in transactions and made $10.4bn in revenue . I'd rather do business with someone like Balanced, who has a larger product vision than "well paypal sucks".

Not sure that's a good comparison. They are basically a merchant account as a service. Retail rate is 2.9% + $0.30. Businesses with strong transaction history and good volumes can get much lower than that from the traditional providers. The merchant account business has higher numbers than Visa processing business.

How do you figure? Visa sees a piece of every card transaction involving a visa card.

Re: Braintree Is On The Block, Had Acquisition Talks With Square And PayPal

#37

Post by cstejerean »

aquark wrote: post #29
ajsharp wrote: post #18

Anyone building a card processing business is going to have trouble finding long-term cash flow because the margins are razor thin. For example, Visa processed $6.7 trillion in transactions and made $10.4bn in revenue . I'd rather do business with someone like Balanced, who has a larger product vision than "well paypal sucks".

Anyone know how the fees in the industry break down then ... $3bn is Though all I know is the headline rates quoted for most common processors where <2% seems very aggressive. Who gets the other 1.95% of that?

The issuing bank and the acquiring bank generally split that, with about 1% or so going to each.

Re: Braintree Is On The Block, Had Acquisition Talks With Square And PayPal

#38

Post by cstejerean »

ajsharp wrote: post #36
sologoub wrote: post #34

Earlier quoted context omitted.

Not sure that's a good comparison. They are basically a merchant account as a service. Retail rate is 2.9% + $0.30. Businesses with strong transaction history and good volumes can get much lower than that from the traditional providers. The merchant account business has higher numbers than Visa processing business.

How do you figure? Visa sees a piece of every card transaction involving a visa card.

The percentage that Visa charges should be much lower than what Stripe / Braintree charge. Visa can afford to stay in business at a fraction of a percent because they make it up in Volume.

Re: Braintree Is On The Block, Had Acquisition Talks With Square And PayPal

#39

Post by natrius »

kintamanimatt wrote: post #15

This acquisition culture is almost always bad for customers. Imagine what PayPal would do to Braintree if they acquired them. PayPal can't even manage their own risk without pissing customers off. I can only imagine they'd slowly turn Braintree into a braindead company that's nothing but a shell of its former self. I sincerely hope Braintree finds a way to keep its independence and continues standing on its own. We n…

Without the acquisition culture, many of these companies would never exist or be able to raise the funds to grow to the point where they could have so many happy customers in the first place.

Re: Braintree Is On The Block, Had Acquisition Talks With Square And PayPal

#40

Post by dkubb »

callmeed wrote: post #10
cesarpereira wrote: post #5

Earlier quoted context omitted.

Both (leaning more heavily towards bad) Bad: Paypal as a potential suitor will make some existing and potential customers very nervous and that won't be good for customer acquisition. Other potential suitors may see other heavyweights passing on the deal as a negative. Good: The attention may increase the pool of suitors.

Exactly. We process over $1M a year with Braintree (that's why I posted this article). In my opinion, PayPal is the worst possible scenario short of Braintree shutting down. The thought of forcing thousands of customers to re-enter billing information makes me throw up in my mouth a little.

Contact Braintree if you're concerned. There are processes in place where they can transfer payment information (including credit cards stored for recurring billing purposes) to another payment gateway.
Post reply on HN