Beware of Braintree
A month ago, I launched https://remoteonly.io and about a week ago, it got its first paid listing ($199 US). A couple days after that I got an e-mail from Braintree saying my account had been flagged for review and they started asking for a bunch of information (frankly, way too much information: things like my LLC's bank statements, multiple ids for me, phone bills, etc.).
We then started a back and forth discussion whereby the Braintree Risk person would e-mail me about once a day asking for various bits of info and I'd reply within an hour as well as I could. Well, this morning I woke up to the final e-mail in that chain letting me know my account had been closed:
Your [REDACTED] account was recently flagged and unfortunately, we will be closing your account effective immediately.
After the review we were not able to mitigate enough risk to continue the processing relationship. When we review a merchant, we review all aspects of the business/model.
I use the same LLC to do my contracting and I mentioned to them that I planned to use the same Braintree account with multiple SaaS businesses and the reviewer assured me that this was OK. The account hadn't had a single chargeback so I'm led to believe they closed it because they didn't like the business model (pay what you want w/ a $69 minimum).
This fucking sucks.
[EDIT] The saga continues:
I had e-mailed the reviewer asking if there was some sort of appeals process and asking for details on what exactly the problem was. He replied with:
Hi Bogdan,
I understand your frustration with our decision. Per our agreement with our sponsoring bank, we have to do our due diligence in order to mitigate risk on all accounts.
After the review we were not able to mitigate enough risk to continue the processing relationship. When we review a merchant, we review all aspects of the business/model.
You are always welcome to reapply.
Regards,
Mitch
and my reply:
Hi Mitch,
Can you at least explain what the risk is that you're anticipating? I would be willing to change the business model to one that's less risky, but I need to first understand what exactly the problem is.
Best,
Bogdan
Despite what he says, I don't think he quite "understands my frustration."
This is interesting, because I went through the very same thing recently with https://www.stackdraft.io/ - in the middle of my first users 14 day trial, they e-mailed me the account has been flagged for review.
The following are pointers and general thoughts on the same subject, but not necessarily claiming the OP didn't follow them (he may have done everything right ). Hopefully this is useful to others.
Also, if you decide to read this message, I highly recommend you follow to the end. Because the tl;dr is "I would still recommend Braintree nevertheless, if Stripe is not in your country".
Let me start by saying I've done my research before choosing Braintree. Stripe is not available at the time in Poland (I've already talked to Stripe and they're coming here, no ETAs yet), other payment processors required a high flat fee I couldn't afford for a brand new service or had high percentage based rates. Eventually I went with Braintree.
I read on the internet you should really verify your account fully, before you start processing. (I even read they basically caused one start up to shut down, but if you ask me - they didn't do their homework, and they also didn't comply with Braintree TOS, so you can't blame Braintree). So I did verify fully and it was all nice and dandy. The EU sales / support was fantastic - we exchanged a total of ~60 e-mails (I'm new to payment processing and I was being meticulous). They were very kind and helpful.
According to their guidelines, I e-mailed them a few days ahead saying I'll be going live soon, which they thanked me for (just in case they notice a spike in sales - which there wasn't really anyway).
A few days before the launch, along the guidelines, I charged my own credit card in production to see it all went well. And it did.
So I went live with Stackdraft (launched also on IH :) ). Then the interesting part started.
They flagged the account for risk review. The interesting part is M. from Risk Management mentioned www.unravel.eu (which is really my company domain placeholder - I didn't have time to make a website for it!), and not www.stackdraft.io that I needed Braintree for. I was like "why the f is he referring to unravel.eu, and not stackdraft.io"?!
Here's part of the e-mail:
Well, you JUST did interrupt my processing, after I charged my OWN credit card... fancy. I would prefer to submit these docs before I went live. I really didn't care they withheld my own $10 haha.
I submitted two statements of empty EUR and USD accounts I created specifically for Stackdraft and asked straight up how much they expect to see on my accounts to prove my credibility, regardless of all the due diligence I made before I went live. Eventually I submitted a screenshot of my 3rd company account, just the balance (without history), which was okay for them. Although, if you ask me, I felt like someone just pulled my pants. My e-mails really showed my credibility (60+!!!), but that wasn't enough.
Note he asked when my website will be live... I'm like "You serious dawg?". I wrote back I notified them before I went live and clearly they're not on the same page.
For the description, I sent him the correct website address...
For how I'm marketing, I pasted HN, IH and ProductHunt launch sites, as well as a few Tweet replies from notable people (Google, DigitalOcean, Algolia).
I submitted the docs with explanation, they replied with the follow up:
I always replied with full information and politely, but I also expressed my disappointment about the timing of the risk review. Here's the reply.
NOTE this: "Our systems are build to flag merchants who do not have a live website." - At that point, I was... lets put this politely, MAD. I contacted Davis from support and requested to remove any instance of unrave.eu from my account and replace it with stackdraft.io, so they don't automatically flag me again for "not having a live website".
Another e-mail reply from Risk Management:
He wasn't a manager, but a director. I felt naked. I had no choice, I couldn't screw this up, because I invested everything I had in Stackdraft and it would go belly up without Braintree, so I chose appropriate (containing non confidential info) DM from Braintree with a director from Google, and a VP from DigitalOcean, and submitted these screenshots.
Regardless of what I just said, if they asked for anything else, I knew I would thank them and part my ways with Braintree, because this has already gone too far.
Ironically, the last question Risk Management had was easy:
I was like "GAWD!!!!!!" and replied calmly with the following:
https://www.stackdraft.io/register
I'm sure you can tell the professional tone I kept all the way through the e-mail exchanges, regardless of my frustration.
SUMMARY TIME!
I'm not sure I've seen anywhere in the Braintree docs to expect a risk review once I started processing. I think I haven't seen anything like that. I DO understand Braintree has to be meticulous regarding their customers, because payment processing is like taking a line of credit. If you have annual plans (reason I don't have them yet...), the risk of your account is much higher - you could charge a few customers and run with the money. Then Braintree would have to pay out to these people for the lack of service you seemed to have offered. You get the point.
So... I really do understand all the nit picking, BUT I would much prefer Braintree did that before I started processing. It did take me by surprise.
M. thanked me for all my replies, and the risk review was successfully closed the same day. They disbursed my own $10 (lol) ~3 days later (he said it would take 2-3 business days).
Effectively, withholding my first charge prevented me from testing end-to-end of my payment processing (invoicing, for instance).
All in all, I would still recommend Braintree, if you don't have much choice. I've read a lot of bad publicity about PayPal (and I haven't enabled PayPal payments via Braintree on Stackdraft), but Braintree, in general, does seem like a trustworthy company. They did surprise me tough and expected a lot of proofs of my credibility, which I didn't expect to submit. I did expect a risk review like, once a year maybe, but not after 7 days of launching a 14 day trial.
I will finish by saying that the pre-launch support was fabulous and I couldn't say a bad word about tree at that stage. The risk review was unpleasant (though all communication was professional on both sides) and I would prefer to have been expecting it so early. But if you don't have much choice, you gotta stick to your guns.
Sorry for the long post, but if you're with Braintree, you'll be better prepared for what comes. Even though Braintree is 1.9%+0.30EUR and Stripe is (outside of Poland) 2.9%+0.30USD, Stripe seems to have more integrations and libraries and, after this experience, I would probably go with/switch to Stripe, once they're available here.
I can understand ID's and stuff, but there's no F'n way I'd send a balance and transaction list from my bank account to them. What are they thinking asking such a request?
Thanks for the comment Josh. So, I sent them my 0 USD and 0 EUR initial balance (I literally just launched and had no payments yet). I also sent them the screenshot of the balance on the 3rd account (initially they requested the history and balance, but after my honest question 'how much do you expect to see' they said "a screenshot of balance will be fine") - I think it's because if you can't prove you have some money, you may as well try to defraud people of money, shut down business and run. If you have at least some money, they can tell "okay, if something goes belly up [think chargebacks], this dude/gal has cash to transfer back to us". That's the only explanation that makes sense to me. Otherwise they would have no reason whatsoever to ask for that. They're trying to verify "you're trustworthy", but it does feel like they stripped you from your clothes. I literally had no choice, but my patience was running thin.
That's such a bizarre frame of things... I can fraud people with $10k in my account just as much as with $0.
True. Yet I suspect you'd be more credible to them with $10k in the bank. I know, don't ask me... :/. The whole point of using a PSP is to make money. Not to show you have money.
It borders on abusive.
They were so interrogative. Not just identity information (personal and LLC) but also banking account and transaction information of even your other unrelated businesses! Then they also asked how the marketing is done. It's like "teach us how you do your work" as if you can't protect your business by having competitive business secrets.
Then they can just copy the business if it is very profitable. Then they can close yours and say oops risk stuff.
This makes me think of why I support cryptocurrency so much. It would free us from all this that appears like tyranny of banks, payment processors, and others like bank card companies).
But then, I didn't know about this part:
I didn't know that it is risky for the payment processor, I didn't even imagine the scenario you mention! It's sad that we all have to pay for the scammers out there (and yes there are so many of them!).
Scammers and thieves ruin everything. Some even regard crypto as just a way to steal and scam. This is just so sad! But it's indeed based on experience: look at all those billion scams out there.
So we need banks and the related players around them (such as processors and bank card providers): they provide trust by being intermediaries.
I also had no idea before that accepting payments is like taking a line of credit. That example above got me the 'a-ha!' moment.
Your last paragraph is on point! I'm not into crypto, but I understand its advantages, and going through all this payment processor setup, I look forward when crypto is more popular and offering this kind of payment is equally (or even more) popular as PayPal, credit card or direct transfer.
Looks like you and I spoke to the same reviewer. A little more backstory: like you, I actually fully verified my account before launching (back in 2016!). In fact, I had successfully used Braintree with one SaaS back then, although that one didn't take off so I shut it down.
Here's my full conversation with the reviewer:
Mitch:
me:
Mitch:
Mitch:
me:
Mitch:
me:
Mitch:
me:
(I had attached a screenshot from my online banking account)
me:
Mitch:
me:
At this point, I ended up calling him to see if I can't help expedite the process. On the phone I brought up wanting to run multiple SaaS businesses on the same account and he mentioned that would be OK.
He later e-mailed me this:
me:
Mitch:
me:
And that was the last of that thread. The last e-mail I received from him was:
I don't know what I could possibly have done better. Like I mentioned, the account had no complaints and I was completely open and responsive during the review process. I guess they just figured I wasn't worth the trouble.
Oh dude... We were so similar! I'm sorry they shut you down, that really sucks :/
I immediately noticed he asked about http://cleartype.io, just like he asked me about unravel.eu (which is a domain placeholder for now, and had nothing to do with my product =_=`).
For the sake of full transparency for others, I'll follow up with this:
I did submit a scan of my personal ID when registering, not during risk review - Bogdan was asked for a copy of his Passport;
Similarly, I did submit a utility bill or two when registering, not during risk review - maybe it was long since Bogdan's account was reviewed and they wanted to check if he moved? Don't get me wrong, I'm not trying to cover for them, just wondering.
Copy of incorporation - nothing similar during my risk review
Copies of your past three months bank statements for your business account showing beginning and ending balances - yeah, I've shown them 0 EUR, 0 USD, and a balance of my company (but Braintree unrelated) account. To be honest, I was worried around $2.5k wouldn't satisfy them, but what's the point of closing an account based on that, if I came to them to collect money, right? That would be an irony.
I didn't read all of those e-mails, but most of them. I'm sorry they didn't find your replies satisfactory :/. It's a bummer when an indie hacker faces struggles. I've been there myself. I wish you good luck, buddy.
I remember sending them all of this information when I first created the account, though I suspect you're right and it's a timing thing: they probably needed it because it's been about 2 years since.
The account I showed them actually had a good chunk of money in it, which is why I followed up mentioning that I do my contracting through this LLC as well. In Romania, you can't be the sole proprietor of more than one LLC.
Thanks man! I'll just have to find someone else to handle my payments. :D
Accepting payments is such a pain, high fees, low availability(services like stripe are not available in most countries). And most of all these weird policies of these services which can kill business whenever they feel like. And now most countries are banning the possible alternative of crypto payments too. All this sucks.
Exactly! The sad part is "kill business whenever they feel like". Crypto came to my mind as I mention in my comment above, but then crypto is filled with distrust because of scammers. It's sad because of human nature where a significant percentage of the population are thieves/losers.
What do you think?
Crypto can democratize things as it's easy to get started and basically anyone can create not just an account but a bank as well. So maybe it can help reduce monopolies (or reduce the power of banks) and we would still have trusted intermediaries.
I was a business conference a few days ago and end up having a discussion with some senior management people of some prominent banks. When my friend asked him that things like paypal and square are taking their buisness, they smiled almost mischievously and asked "and who control them?".
Although Crypto is not mature enough(apart from currencies like btc and nano), i hope the ecosystem matures and provide an alternative to the tradiational blood sucking systems.
Wow! He's almost confessing! Yes Paypal and even Mastercard are all "small" compared to banks and they rely on banks (different kinds of banks). We need companies like Paypal and Stripe to grow big because they come from a non-banking tradition. They come from the technology sector and are distrupting banking, at the same time, for now at least, they rely heavily on banks.
I agree with the wording.
What about moving to Paddle? I've heard good things about it (though I haven't used it).
Paddle is great. Totally satiedfied with them and they handle the whole EU Vat thing too. Using them mostly for download goods though.
This thread is the first I've heard of them. I'll have to try them out, although there's on indication of where they're available on the website (that could mean they're available everywhere!) and the pricing seems a little steep (5% + $0.5c per transaction). The additional features (invoicing, VAT handling, etc.) may well be worth it.
I think you need to check with Paddle if they could work with your business model. As far as I know, they're pretty selective with the kind of business they work with.
In my experience using paddle for draftss.com, we tried moving to Paddle last month and received a confirmation from their support team that we can start using paddle for our services and start billing the customers instantaneously and there was no need of any further verification. Everything was proper and started billing our customers. We added the products successfully and sent it to few of our clients. After receiving paid subscribers, almost after 10-12 days later the subscriptions were cancelled stating that Design falls under Human services, which they do not allow on their platform. This comes after confirmation from the paddle support team even before signing up for Paddle. We're glad that we didn't move all our customers in a single go.
Oh dude, that sounds like a bad joke. Sorry to hear it.
You were right! I spoke to their support and, essentially, they don't support services. RemoteOnly falls under Human Services, like draftss.com, in their view. Thanks again for the heads-up.
Happy to be of help! Let me know if there's anything else I can do to help :-)
I know of their human service exclusion but how is your job board a human service? Mind to share the answer you got?
Thanks for the heads-up! I've sent them a message.
Paddle is freaking awesome. Initially I thought that the pricing is high. But It is worth it.
Thanks for the heads up Bogdan.
I can see why you'd be upset. OTOH, I can also see the risk that Braintree is under.
Most new small businesses, including saas businesses, are going to fail. I assume subscription saas businesses suffer a particularly high rate of chargebacks when they shut down because their customers receive no benefit for their last enrollment period.
That means Braintree (and similar businesses like Stripe) have to review the business models of their saas customers pretty closely to see how likely it is to succeed.
FWIW, we signed up with Braintree a couple of years ago back when they began offering $50k in processing for free to new customers. We chose them over Stripe because they included PayPal as a payment option, which is about 10-20% of our what our customers use to pay. We've had no problems with them and found them very easy to work with, but we sell physical products (not saas) and have been in business for over 20 years.
This is a fair point, but if this were the case then you'd expect them to ask about operating costs as well, wouldn't you? It costs me about $12/mo to run RemoteOnly so this one $199 payment would've "kept the lights on" for quite a while.
Maybe that's why they requested bank statements from others when they signed up for the service?
Fair points on reviewing the service. In my case, I would prefer they did the risk review together with "account confirmation" (process that happened after registration), not a week after I charged my own card to test payments, and launched the business :D
OTOH I like Bodgans POV - they're interested in your bank balance and history, but they don't even ask about operating costs. Good point.
Yes, that's a fair point. I wonder how many start ups sign up for the service but never process any payments? If it's a significant number of their new customers, it would save them the expense of background checks on customers who aren't going to generate any revenue for them in the long run.
For recurring payments, a friend of mine recently started using recurly.com and apparently it works quite well. Also works in Europe (I'm located in Germany)
I believe recurly requires that you already have a payment gateway (like Braintree) to use it.
ah true, didn't realise Braintree was a payment gateway in itself.
If I recall correctly they mentioned using Adyen with it
I also checked out Adyen, but it seemed like they're more set for the established customer, not a ramping-up indie hacker. Just my opinion.
BrainTree is a freakin' shit storm; even worse than their parent company (PayPal). We went through a similar experience when trying to move our established business, with proven revenue, on to their platform.
Their risk assessment is total joke and based God knows what kind of fairy metrics.
Apologies for the rant.
What did you end up switching to in the end?
FastSpring; which in hindsight was the better option anyway. If only I would have known before spending days coding up Braintree integrations.
Braintree is owned by Paypal. I know quite a few people moving from Braintree to something like Paddle or Fastspring(if you are in Europe) or Stripe
Wow, sound's like some pretty bad customer service. Have you looked into Stripe or other services?
Unfortunately, Stripe isn't available in Romania. Most other options either require that payments be made on their hosted page (which is horrible UX imo), have horrible rates or look shady as hell at first glance.
Would definitely appreciate getting recommendations from folks who have used alternative services, though.
Folosesc Paddle de un 1 an, is scumpi dar ok. Cu Braintree o sa ai probleme cu TVA-ul.
That's a difficult situation, I'm not sure of any services in romania. Maybe 2checkout?
To be honest, I'm staying away from Stripe and Braintree. I started forging knives earlier this year and wanted to start selling them. I had no idea it would be so hard to get a payment processor. Stripe banned my account after a few days.
My long-term solution is to handle all payments in the future using crypto. GumRoad took me on as a customer thankfully, but I don't trust that it will last. I allow payments using crypto and credit cards for now.
Thank you for writing this, although i'm not close to launching a product, my plan was to use BrainTree and i'm also located in Romania.
I'm curious what's the next step for you?
Do you plan to try out https://fastspring.com/plans/?
In a parallel thread i found https://www.2checkout.com and https://gocardless.com, what do you think about them?
In any case please keep us posted on the progress!
And good luck with https://remoteonly.io !
Thanks Zoli!
I have switched to 2checkout and all seems well so far.
I've looked at GoCardless in the past and it looks nice, but I'm afraid it's nowhere near as convenient as using a credit card so it would probably affect conversions. People not trusting what they're not used to and all.
I've had the same experience with another provider. This is, unfortunately, the standard procedure nowadays.
I would suggest to call them (instead of email) and talk. I got it resolved by calling, and speaking with an account manager.
They are also people and will understand you. After all, they want to make a profit from you too :)
I've never used Braintree but I've heard there are reviewing problems and integration problems.
In Palar we went from Braintree to Paypal which might seem futile, but we actually experienced better customer support.
Interesting. Sounds like a move nobody would recommend (based on opinions about PayPal). Why have you gone that route?
I used https://www.chargebee.com/ as recurring payment solution and Stripe as payment gateway. So far no issue at all. Initially my options are Chargebee and Braintree, in the end I go with Chargebee because of Braintree bad reputation. Look like you are from Romania, however, Stripe does not support Romania, yet.
I really don't have much bad to say about Braintree except this ridiculous risk review in the middle of my first users trialling, but it does seems like Stripe is solution to most problems. Looking forward to see them in Poland. Although I don't look forward to switching payment processor haha.