Look Out, YC Payments Startup Balanced Is Processing $370M A Year

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After eBay’s Paypal bought Braintree for $800 million earlier this year, who’s next?

While Stripe is known as an innovator in the payments space, it turns out there is another YC-backed company that’s on the rise too.

Balanced says it’s currently handling a volume of more than $370 million per year, and says it is servicing more than 440 marketplaces and crowdfunding platforms. That’s roughly eightfold growth since the beginning of last this year in both transaction volume and the number of customers. For comparison, Braintree said it was on track to process about $12 billion a year around the time it was acquired by eBay.

The company was originally built to help marketplaces like CrowdTilt, TheFancy and Reddit Gifts manage payments between their buyers and sellers. The complication here is that marketplaces have to both help buyers process their payments and help market-makers compensate their sellers.

So Balanced handles all of the basics like credit card processing, fee collection, tax reporting and fraud prevention. But they also do things that competitors don’t allow like next-day payments.

One other unique part of Balanced’s company culture is that everything they do is open sourced. So there are non-Balanced employees who are contributing to the company’s source code and feature ideas are discussed openly with Balanced’s customers even before they’re built. Balanced’s CEO Matin Tamizi was inspired by companies like App.net and Gittip, which share product specs, roadmaps and open-source code.

While they originally positioned themselves as a payments provider oriented towards marketplaces, other competitors have moved in as well. Stripe launched its own service for collaborative consumption startups like Lyft in June of last year.

To keep up with the competition, Balanced is introducing a new set of pricing tiers. If you’re running a business that processes less than $100,000 per month, your rate is the standard 2.9 percent plus 30 cents a transaction. Braintree and Stripe have the same basic rates.

But above $100,000 per month, it drops to these rates:

Below $100,000: 2.9% + 30¢ a transaction
$100,000 to $500,000: 2.7% + 30¢
$500,000 to $1 million: 2.4% + 30¢
$1 million to $5 million: 2.2% + 30¢
More than $5 million: 1.9% + 30¢

Balanced has raised at least $3.4 million in funding from investors including Andreessen Horowitz, SV Angel, Airbnb CEO Brian Chesky, celebrity investor Ashton Kutcher, and Reddit CEO Yishan Wong.