HN Explorer

Payments Company Braintree Waives Fees On The First $50,000 in Transactions

7 points by dreamzook ↗ HN
I saw this post and applied online for their promotion. I have just started and because of this went and even set up a bank account(didnot need one earlier since I have not raised money from outside) , TaxId etc to get this free transaction and here is the email I get from braintree sales rep

Your business model is known as third party aggregation, which is considered higher risk by most banks. We do have a bank that will underwrite you likely, however due to the risk of the business model they will implement a 5-10% 6 month rolling reserve. Unfortunately that means you will be ineligible for the promotion. ( I donot see this on their ad)

If you would like to continue the process and apply with them, I'll just need you to fill out the prescreening questions below. If you have any questions, I've CCed a sales rep, Eric Hall. They should be able to help you out.

Then there is a bunch of question below. My question to them was what are they providing more than paypal or stripe besides this promotion to even go with them. Does anybody else know?

Even to underwrite me they want last twelve months P/L, balance sheet and what not

8 comments

[ 3.0 ms ] story [ 28.1 ms ] thread
bmelton
At scale, they're cheaper than both Stripe and Paypal (not counting the discount for this promotion) -- once you get to a bigger volume in sales, you'd likely become eligible for better pricing than the 2.9% + 30cent standard everywhere.

Initially, it's probably as cost effective and quicker to get started with Stripe until such time as providing a 12 month P/L is easier to do, but by then this promotion will likely be gone.

dangrossman
Unfortunately these aren't options for him if he's a third party aggregator as the mail says.

> you shall not: ... (ii) submit any card transaction for processing that does not arise from your sale of goods or service to a buyer customer, (iii) act as a payment intermediary or aggregator

dangrossman
> what are they providing more than paypal or stripe

For one, they're providing the opportunity for you to open this business. That they have a bank willing to underwrite that type of account is significant.

PayPal, Stripe, and just about everyone else in the payment processing industry, will not work with you at all. Aggregating/factoring payments on behalf of others is prohibited in their terms/merchant agreements... because it's extremely financially risky to run such a company.

If it's not obvious to you why that is, you should consider picking up a cofounder with experience in online fraud/risk management. Managing fraud/risk is a core competency of every third party aggregator that survives its first few years. It's the reason PayPal is here today while their many earlier competitors went bankrupt.

dreamzook
that is not true...I have setup paypal for my site... And I certainly agree to your point about managing fraud... all I was trying to bring out forward was this promotion that they say is for startup is not true. Its for a company with P&L..So a YC company like UBER, or AIRBNB would not even qualify
dangrossman
That you were able to set up PayPal does not mean you're allowed to do what you're doing. Acting as a payment processor collecting payments on behalf of others is prohibited in the Acceptable Usage Policy. If that is what you're doing, there will come a day when you are moving enough money that it triggers an account review, they'll see that your business type is prohibited, and your account will be closed without notice. Be prepared for it.

This promotion of Braintree's is for startups... the 99% of them that can take payments with a standard merchant account with a normal risk profile. Startups that are selling their own products or services, not providing payment aggregation.

As they said, you are not that kind of startup, so you're ineligible for the promotion. Now that you know this, you have the option of going through underwriting for a high risk merchant account, which requires additional documentation. They don't ask this documentation of startups taking advantage of the promotion you're ineligible for.

dreamzook
so let me ask you this..uber and airbnb can they do business via paypal and braintree...they are a third party aggregator
dangrossman
No, absolutely not, those companies would not be able to sign up for PayPal or this Braintree offer on the spot and start running. You can read the legal agreements yourself, they're on the websites and don't require an account to view. Those companies have gone through underwriting and probably have special terms in their merchant agreements to protect against the risks inherent in their businesses.