Traditional Payment Solutions
Before I moved over to Braintree, I first started looking for a payment solution for PieSync in the beginning of 2012. The initial features we needed sounded simple enough: an API so we could create our own payment pages to match the existing design, clear documentation, a ruby library or wrapper and built-in support for recurring payments. Nothing too fancy, so I thought.
I had already heard about the new players disrupting the American market, but I started out reading more about the traditional solutions and quickly noticed there used to be two main routes: applying for a merchant account at a bank or signing up for a PayPal account.
The fastest is to sign up with PayPal. Warning: fast is very relative here. They allow (almost) anyone to start accepting payments, but the API is archaic and getting in touch with support is a pain in the ass, which means completely implementing it will still take several weeks. The fees are reasonable, but they are known to take the buyer’s side, to the extreme. I have never been a big fan of them and if you just read some of the stories you too will probably avoid it like the plague for anything serious.
The other possibility is applying for a merchant account. At a bank. One of the most cumbersome and slow institutions there are. It will take a truckload of paperwork, following up every day and having the patience of a saint. And then you still need a payment gateway and a payment provider to handle the recurring payments, all seizing a decent chunk of money quickly adding up to 10% of the sales price for a starting business.
Braintree saves the day
I knew we would only start accepting payments towards the end of 2012. So I put off applying for a merchant account as a combination of procrastination and hoping that someone would come up with a business model like Stripe in Europe within the next few months.
As luck would have it, Braintree announced mid-2012 that their international expansion, including Belgium, would be publicly available by fall 2012. They are another big player (they currently process over $5 billion in payments annually providing a full-stack payment solution destined to bring down the hegemony of PayPal. They are also in constant battle with Stripe to win over merchants’ interest.
I remember we were all super excited about this, as Braintree was at the top of our list and time was starting to catch up.
Application and Implementation
While most American merchants are approved instantly and can start accepting credit cards right away, companies in other countries still need to apply for a merchant account. For us, this meant getting accepted by Adyen, a partnered payment institution from the Netherlands.
Braintree goes a long way in supporting you every step of the way, but you still need to fill in quite a lot of legal documents and send them a copy of your business plan. Prepping all the paperwork and adding the necessary legal text (refund policy, terms/conditions, privacy) to the website took us about a week. Most of this time went to actually writing the business plan which before only existed out of a bunch of separate documents and unrelated thoughts scattered on Google Drive.
We were surprised to receive an email telling us we were accepted less than a week after filing all the documents and we could now start to accept payments. The next day we tested it with our own credit card and it all worked perfectly.
While waiting for our application, we started implementing the Braintree ruby API on our website. The documentation is well structured and straightforward. Setting up the payments logic just took one developer a few days, including thoroughly testing everything using the provided sandbox environment.
One thing that did catch us off guard, was that Adyen was going to set the first $3,000 aside as a reserve. In case you go out of business, the bank who provided you with a merchant account is responsible if people ask for a refund, which can happen up to 6 months after the initial purchase. This is also the reason banks prefer companies to start out with monthly plans instead of yearly payments, as this would greatly increase the amount of risk involved.
Due to the amount reserved as a buffer at Adyen, we have yet to actually receive our first euros. Yet we are very, very happy that Braintree swooped in just in time to provide us with their lovely product offering.
If I would have to do it all again now, Braintree would still be definitely at the top of the list. Paymill, a Stripe clone backed by Rocket Internet focused on the European market available since November 2012, is another competitor worth checking out.
All in all, the European payments landscape has seen a lot of improvement over 2012. I am certain that 2013 will see the introduction of even more competitors and that together they will continue to push the boundaries of what is possible, offering rates and services comparable to the American market.