RobWebb2k

Braintree Payment Solutions, winner of this year’s New Venture Challenge at the Chicago GSB, has bravely entered what is, as far as I can surmise, one of the murkiest, confusing, and frustrating industries out there: credit card processing.

I spoke with Bryan Johnson, CEO of Braintree, early on in my search for a web based credit card processor but decided to grind it out and investigate all of my options. I was pretty thorough in my research. I spoke to five or six of the most legitimate providers I could find, including the major national bank I use for personal and business banking. Before I even started looking into the product and service differences of the various providers, what I found over and over again was convoluted rate structures, hidden charges, and mysterious fees. Bryan tipped me in our early discussions that all processors face the same interchange fees from the backbone of the credit card processing system, so when a processor offers you a deal that is too good to be true, it almost certainly is. Specifically, processors quote you attractive “flat” rates and hope you base your decisions on them alone. But since all processors face the same charges from the underlying interchange, these processors have to either be hiding costs or losing money on your contract…and you can bet the chances of that are slim to none.

One of the most common tricks I saw is processors quoting you a flat rate without giving you any additional details. Well, if you investigate and ask them if that the ONLY rate I will pay, you’ll find that the rate is generally only for “qualified cards”. Then most folks that are selling legitimate products who get this far then think “Great! My average consumers have jobs and pay their bills on time. They must be ‘qualified’, so I’ll get this rate.” Wrong. Many, many commonly used cards, like corporate cards and rewards/mileage cards are actually “non-qualified” and face much higher rates, which are never mentioned unless you specifically ask about non-qualified rates. Even then, sales reps will try to brush off non-qualified cards, hoping that you have no idea that the majority of the cards you’ll be processing, and even the cards you use yourself, are actually non-qualified. In the end, I figured I’d be better off with a company that didn’t try to mislead me from the get go.

Some other things Braintree had going for them is that they have products and services for everything we were doing. I needed a merchant account for credit card processing, electronic check processing (ACH & EFT), a payment gateway, virtual terminal, and an easy and flexible API to integrate everything. With some of the other providers I had to piecemeal a solution together myself. I like the fact that I have one company doing all of this for me. The other thing that I thought was significant was that Bryan made me aware of the industry security standard: PCI Compliance. Businesses that process credit cards must meet the 12 security requirements to securely protect credit card information. If businesses get breached, they can face some pretty significant fines. Bryan has some nice write-ups on this for large and small businesses on the Braintree Blog. To help us with that security threat, Braintree has tokenization technology that allows us to remotely store all credit card information so we have nothing onsite that we need to worry about. We simply submit the cardholder information once and receive a token in return that we can then use to remotely initiate transactions. In short, we are able to let our customers create accounts, provide their credit card information once, and never have to do it again. It makes things easier for them, which makes our business a better one.

Braintree was not only clear and above board with their pricing and fees, but have also been incredibly responsive to our technological needs, providing nearly instant support and solutions for all of our problems every step of the way. If you’re like me you’ll spend a couple weeks pulling your hair out trying to figure out all the terminology and tricks of the industry. I recommend talking to Bryan at Braintree before you begin. He’ll fill you in on what to look out for, and then when you find mysterious things along the way or deals that seem great, ask him what’s really going on. Then, after you’ve lost a couple of years off your life, you’ll end up back at Braintree and I’m guessing you’ll be very happy with their honesty, flexibility, technology and price.