Braintree quietly making sure startups get paid

Besides being some of the hottest start-ups around, Rovio, Uber,, Airbnb share a common thread: their payments are powered by Chicago-based Braintree, a payment provider that has quietly become a force in the online commerce world. The company, which raised $34 million from Accel Partners last year, is now processing $4 billion annually and is on pace to break $1 billion for mobile in the next month.
Braintree’s services still trail PayPal (s ebay) and Visa (s v), but the traction it’s getting from start-ups as well as bigger companies is showing that its developer-focused approach is paying off with customers. Braintree provides a full set of payment services from credit card processing, payment gateway and merchant accounts, to recurring bills and credit card storage.
Founded in 2007, Braintree provides APIs in seven languages and full support for iOS (s aapl), Android (s goog) and Windows Phone (s msft). It looks to abstract the payment pieces away from the developer workload, so companies can just plug in Braintree and get going quickly. The system pushes much of the back-end work to the cloud and allows developers to focus more on their products. And it stores the customer credit card data, reducing the risk for merchants and making it easier to be PCI compliant. Earlier today, it announced that it was allowing developers to create test transactions to try out the service prior to being approved as a payments operator.
“Our whole focus is we want to make the developer’s lives around payments very easy, whatever the environment,” Bill Ready, Braintree’s CEO told me in an interview.
Ready said Braintree tries to provide a “white-glove” level of service, even pointing out code that needs to be fixed before a customer knows about it. That mix has helped Braintree not just appeal to new startups but bigger names like OpenTable, LivingSocial, 37Signals, GitHub and many others. It has more than 2,000 merchants and is taking on 100 new customers a month, winning 30-50 percent of its business from competitors. Design store has been a customer of Braintree and its CEO Jason Goldberg told me he’s quite happy with the choice.

“Braintree is more developer friendly. They put it all out there and then make their team available for calls to help support it. Also, they engaged with us from day 1 of our going live to make sure we could scale our payments with the volume of orders we were seeing. “This is not a trivial thing as the credit card companies only enable small volumes until they trust a merchant,” Goldberg said.
Braintree is also growing by partnering with commerce platforms, including Magento, which announced last month it was making Braintree’s service available to its 110,000 merchants. It’s also signed deals with services like Shopify, Goodsie and others.
While online commerce has largely powered Braintree’s growth up to now, mobile commerce is growing faster. Ready said that ultimately, there will be more payment transactions handled over mobile devices than traditional computers, just as Web traffic increasingly goes mobile. Braintree has tried to make handling mobile payments easier for developers by reducing the number of roundtrips to its back-end servers to just one which helps speed up transactions. And it’s optimized for one-click checkouts by storing cards on file.
Subway, Coldstone and Five Guys are some of the customers turning to Braintree to process mobile payments. And start-up LevelUp, which created its own payment system for its mobile loyalty app, has also leaned on Braintree to get up and running.
Braintree’s rise pits it against established companies like PayPal and start-ups like Stripe, which is also taking a developer-centric approach to payments. Braintree is trying to set itself apart by providing a scalable product that can work for all sizes of businesses. And Ready said the company is quite happy to stay in the background, unlike PayPal which is also a consumer-facing brand. He said Braintree could ultimately grow to be a PayPal-sized business.
“We want to provide solutions that stack up against (Visa’s), PayPal, Cybersource, any size company,” Ready said. “This is a space that’s amazingly underserved. There hasn’t been a player that’s focused on commerce companies.”
Image courtesy of Flickr user foforix