Aug. 21, 2012
Chicago-based Braintree Payments Solutions LLC, an independent sales organization specializing in online merchants, expects its $26. 2 million acquisition of New York City-based Venmo Inc. to position it as a direct competitor to PayPal Inc. in the person-to-person payments business and in digital-wallet applications.
Venmo’s digital wallet allows consumers to make P2P payments via Twitter, Foursquare, and Facebook using credit and debit cards or via bank transfers.
Prior to the acquisition, which was announced on Friday, Braintree processed mobile and online payment transactions and supported development of mobile-payment and e-commerce payment applications through a library of mobile-application tools. Those tools can be used by developers to build mobile-payment applications that accept payment within the application itself, as opposed to through the mobile Web browser. Braintree has more than 40 in-house application developers.
Helping lay the foundation for Braintree’s entry into P2P payments are the more than 30 million credit card account numbers the company has securely stored on its servers from consumers who have made online purchases through its payment gateway. This side of its business sets Braintree apart from most ISOs in that it has a consumer-facing business along with its business processing for merchants. Using Venmo’s digital wallet, consumers can access their accounts on file with Braintree to make P2P payments.
“With 30 million credit cards already stored, Braintree is poised to directly take on PayPal as an online and mobile payments provider for both merchants and customers and give the payment giant a run for its money, particularly in the mobile space,” Braintree chief executive Bill Ready tells Digital Transactions News via e-mail. Like PayPal, Braintree processes through Wells Fargo & Co.
Braintree is expecting mobile payments, including mobile P2P payment, to become a larger percentage of e-commerce. The company predicts that more than 50% of e-commerce shopping sessions will be initiated through mobile devices in the next 18 months, up from 20% currently. Currently, Braintree handles $1 billion in mobile payments, or about 10% of all mobile- commerce transactions.
“Adding Venmo's person-to-person and digital-wallet applications will allow Braintree to make significant advancements in mobile payments,” says Ready. “As people shop and buy more on their mobile devices, developers and consumers will need a different set of tools to thrive in a mobile world.”
One of the tools Braintree expects to offer is a universal checkout page allowing consumers to initiate one-click payment at a Braintree merchant without entering user names, passwords, or credit card account numbers. Braintree has about 2,000 online and mobile merchants including Rovio/Angry Birds, Uber, Airbnb, HotelTonight, and OpenTable.
“A decade ago, we saw the shift of commerce from traditional bricks-and-mortar stores to e-commerce, now we're embarking on a new chapter of commerce on a mobile device,” says Ready.
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