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Table of Contents

Lead Story

Industry builders by association

News

Industry Update

NACHA proposes ACH rule changes

FTC raps processor for boarding scammers

TMR says Shark Tank exposure worth it

SpendTrend numbers bolster holiday optimism

Features

Execute your way to the top

The $800 million Braintree acquisition and PayPal's pursuit of the emerging digital marketplace

Patrick Carroll
First Annapolis Consulting Inc.

Selling Prepaid

Are GPR cards cheaper than checking

Views

Insights from an expert witness

Ken Musante
Eureka Payments LLC

New study on the Durbin Amendment claims consumers took it on the chin

Anne Leisz
Processingfinder.com

Education

Street SmartsSM:
Letting go of the inevitable no

Dale S. Laszig
Castles Technology Co. Ltd.

Your merchants need mobile-friendly websites

Michael Gavin
Merchant Warehouse

Virtual currencies and the law – a primer for ISOs

Adam Atlas
Attorney at Law

Company Profile

OnDeck Capital Inc.

Tecmark

New Products

PayAnywhere 2.0 for Android

Product: PayAnywhere 2.0 for Android
PayAnywhere

New Online Store

Product: New Online Store
Signature Card Services

Inspiration

Give yourself the gift of holiday skills

Departments

Resource Guide

Datebook

Skyscraper Ad

The Green Sheet Online Edition

December 09, 2013  •  Issue 13:12:01

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The Mobile Buzz:
The $800 million Braintree acquisition and PayPal's pursuit of the emerging digital marketplace

By Patrick Carroll

Patrick Carroll, First Annapolis Consulting Inc.

PayPal's pending $800 million acquisition of Braintree illustrates the company's commitment to having a market-leading digital commerce solution across a number of merchant segments and commerce touch points. PayPal's mobile products and services now cater to micro-merchants, Internet startups, and large retail chains – spanning in-store, online and mobile channels.

PayPal has been quite active in the payment space with many solutions already announced or in-market today, including:

In this context, PayPal's pending acquisition of Braintree will broaden its scope of innovative digital commerce solutions. Braintree is an e-commerce gateway connecting merchants and marketplaces with their customers. The company has emerged as a leading provider of mobile-optimized, flexible, and scalable payment services for mobile-reliant companies such as Uber, Living Social, and Airbnb.

A typical Braintree merchant interfaces heavily with customers via their mobile apps, and puts significant emphasis on minimizing points of potential friction along the customer's mobile purchase journey. The addition of Braintree will add a portfolio of merchants that processes $12 billion annually while enhancing PayPal's ability to service an emerging breed of mobile commerce players.

The acquisition of Braintree will also support PayPal's effort to overhaul its developer platform. PayPal's developer platform was designed during the e-commerce era of the late 1990s. Braintree's platform has been constructed with developers and flexibility as a key focus, setting them apart from most other gateways. The expectation is that the Braintree acquisition will effectively represent an overhaul of PayPal's developer platform, positioning the company as a prominent player for emerging e-commerce services.

In addition to enhancing its developer platform, Braintree's Venmo business is an attractive and intriguing asset. Venmo, a P2P payments service, was acquired by Braintree in 2012 for $26 million. Venmo has gained traction and has emerged as a new competitor to PayPal's P2P payments service, particularly among younger demographics. In recent months, Venmo has expanded its P2P payments functionality to also serve as a consumer digital wallet at participating Braintree merchants.

In other words, consumers can make purchases without entering their credit card information by selecting a "Pay with Venmo" option. While Venmo is significantly smaller than PayPal, its integration with Braintree merchants illustrates the reduced friction that many mobile-reliant merchants are seeking in a payment acceptance solution.

The Braintree acquisition, the largest by PayPal during the mobile era, illustrates the company's intent to expand its suite of online and mobile payments solutions. As the in-store mobile wallet race continues to develop in parallel, an investment in the app- and mobile web-based commerce space should put the company in a competitive position to grow its total payments volume moving forward.

For more information, please contact Patrick Carroll, Senior Analyst specializing in Mobile/ Alternative Payments and Merchant Acquiring, patrick.carroll@firstannapolis.com.

Notice to readers: These are archived articles. Contact names or information may be out of date. We regret any inconvenience.

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North American Bancard | Harbortouch | USAePay | IRISCRM.COM | Humboldt Merchant Services