Braintree, an online payments gateway provider for online and mobile platforms, has raised $35 million in Series funding led by New Enterprise Associates (NEA) with participation from existing investors including Accel Partners, RRE Ventures and Greycroft. This brings Braintree’s total funding up to $70 million.
For background, Chicago-based Braintree powers and automates online payments for merchants and companies online. The company provides a merchant account, payment gateway, recurring billing, credit card storage, support for mobile and international payments, and PCI Compliance solutions.
Braintree’s client list includes Rovio/Angry Birds, Uber, 37signals, OpenTable, Fab, GitHub, Airbnb, Heroku, Engine Yard, Animoto, Shopify and HotelTonight. The company is seeing $1 billion a year in mobile transactions and $5 billion in total payments annually for over 3,000 mobile and online merchants. Currently, Braintree works with merchants in more than 30 countries and is able to accept more than 130 different currencies.
For Braintree, the new funding is going to help the company take on giants in the digital payments industry like PayPal. “We think we can build the next PayPal,” says Braintree’s CEO, Bill Ready. “The payments game will be won or lost in next few years, and we need the resources to push the company forward aggressively,” he explained in an interview.
The new funding will be used to build out Braintree’s payments product, for hiring engineering talent in the Bay Area, New York and Chicago, and for additional international expansion.
Ready explains that Braintree differs from PayPal in that it offers a comprehensive, full-featured payments processing platform for both small startups and large companies, like Fab, which is processing hundreds of millions in transactions. He says that traditionally, a small business would start with PayPal, then graduate to Authorize.net (owned by Visa), and would move onto Cybersource processing when the company would have tens or hundreds of millions in payments revenue. But Ready says there is a huge opportunity to service the full range of companies, and that’s what makes Braintree distinct.
“We are taking sophisticated payments capabilities and making them accessible to startups and big companies, and when small businesses grow into larger organizations, we will have everything they need,” says Ready.
Over the past few months, Braintree has been heads down on making its product as useful to merchants as possible. The company expanded to mobile, added support for one-click checkout, cut fees, and eased the sign-up process. In fact, Braintree removed a $100 monthly fee for developers, and starting matching fees of rivals with 2.9 percent rate and $.30 per transaction. Additionally, the company has made some key hires from Google.
The company also highlights Braintree Instant, which gives merchants instant access to a full suite of payments tools, such as international payments and single click checkout, which used to be available to only the largest of merchants after months-long integrations to legacy payment providers. Braintree Instant also aids cash flow by typically providing funds within two days, versus a week or more for others in the industry.
“We are working to do for payments and e-commerce what Apple did for mobile: providing a developer-friendly platform that sparks a new wave of innovation and company-building, ” Ready adds.
But in order to take on payments companies like PayPal and Square, Braintree has to engage the consumer as well. That’s where the company’s Venmo acquisition comes in. In August, the company acquired the New York-based startup, which is disrupting social payments by allowing people to send money to friends via a mobile app.
Venmo, which remains based in New York as a standalone app, is the basis for Braintree’s consumer business. “This will become the slickest way for consumers to make payments to merchants,” says Ready. We’re building a better PayPal on the merchant side, and a better PayPal on the consumer side.”
“Braintree is kicking down both the technology and business road blocks that have made online and mobile payments challenging for developers and a hassle for consumers,” said Ravi Viswanathan, General Partner of NEA, said in a release. “We believe Braintree has the strengths to challenge all the incumbents in the payment space, including PayPal. This investment reflects our confidence in the technology, team and international capabilities Braintree has built.”
As part of the news today, NEA is also opening up a Chicago office to be closer to its investments in the Windy City.
As we’ve recently reported, the payments space is heating up and all the players, including Square and PayPal, are gearing up for the battle. Square just landed a huge deal with Starbucks and closed $200 million in new funding. PayPal is also trying to reinvent itself. New entrant, Stripe, has also been making waves in the industry. And now with Braintree’s new funding, we can expect there to be one more player who is vying for a piece of the payments pie.