Acquiring Braintree
eBay is buying e-commerce payment-processing service Braintree for USD800m in a move to bolster PayPal’s mobile offerings. Braintree’s technology enables users to accept online payments while avoiding having to build expensive infrastructure and the company claims to now be processing more than USD12m in annual payments, USD4m of which occur on mobile devices. eBay says that Braintree will continue to operate as normal and the deal is expected to be closed near the end of the year.
For Braintree the deal represents a decent return for its investors which include New Enterprise Associates, Accel Partners, RRE Ventures and Greycroft Partners. The firms collectively put some USD69m into the Chicago-based company since it was founded in 2007. The company also counts some big names among its clients including Airbnb, Fab, LivingSocial, Uber and Twilio and claims to serve 4,000 merchants across 40 countries. PayPal’s cash and experience in the space will also help the company to scale up more rapidly and via a blog post company CEO Daid Marcus says: “PayPal’s already solved many of the regulatory and logistical hurdles that will help to extend Braintree’s reach.”
Mobile Boost
For eBay the deal takes one of PayPal’s rapidly growing competitors in the space out of the equation, as well as keeping it out of the hands of any rivals. However, one of the primary reasons for buying the company is its mobile offerings. Acquiring mobile payments service Venmo for USD26.2m last year, Braintree’s Venmo Touch product allows merchants to offer one touch payments to customers who have already entered their details into the app. Mobile is a necessary area of focus of PayPal as e-commerce shifts away from desktops to smartphones and tablets, and the company will be hoping to build on the USD20m it is forecast to processes in online payments this year.
Heated Space
The mobile payment space is getting increasingly competitive as startups seek to bring their own approach to in-store payments. The space is growing fast too, with eMarketer predicting it to rise by 93% from 2012 to reach USD1.04bn this year, while retail mobile e-commerce is expected to see 56.5% year-on-year growth to USD39bn.
Mobile e-commerce is an area that Facebook is keen to push into as it looks to monetise its mobile presence and recently inked partnerships with PayPal, Braintree and rival Stripe to introduce an auto-fill feature to mobile retail sites. It was reported that while PayPal agreed to the partnership, it is yet to build the integration feature, something Braintree may now be able to provide for it. However the partnerships could be a precursor to Facebook building its own payment processing service, in which case PayPal might find itself up against a new rival.
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