Braintree Acquires VenmoNew York Times Aug 17, 2012 Back to press
The mobile payments war continues to escalate.
Braintree, a payments company that supplies technology to process credit card transactions on a mobile phone, said it purchased Venmo, a start-up that lets people send to and receive money from their friends. The company paid $26.2 million for Venmo which was first announced in 2009. Venmo’s founders have said that the company processes around $10 million in payments monthly, a figure that has grown by 30 percent each month. They expected to be processing $250 million annually by the end of 2012.
Braintree’s technology is used to process credit cards on more than 3,000 e-commerce sites, including Fab.com, Airbnb, Uber, Hotel Tonight, LivingSocial and the Angry Birds games. Executives say they plan to integrate Venmo’s technology into their own software, so that anyone with a Venmo account will be able to pay for items and transitions on the Web and on a mobile phone using their existing Venmo account. Braintree, which is headquartered in Chicago, will not relocate the 23-member Venmo team, which is based in New York. Instead, the small start-up will continue its operations on the East Coast and keep its text-based payment system up and running.
Bill Ready, the chief executive of Braintree, says the company is preparing for the coming wave of mobile commerce. Of the $4.5 billion in sales that the company processes each year, $1 billion of those are on mobile phones. Mr. Ready expects that folding Venmo into Braintree will help it take on larger, more established rivals in the online payments industry, including PayPal, as well as other companies, like Google, that are looking to gain traction with their own version of a digital wallet.
“PayPal was built 10 years ago for Web browsers,” said Mr. Ready. “It hasn’t really updated the way people take payments.”
Braintree currently has 30 million users registered through its site. Mr. Ready hopes that Venmo’s small, but dedicated footing among the early-adopter tech crowd will help it gain an edge against other payment processing start-ups, such as Stripe and Dashlane.
“The shift to mobile is coming and it is coming very quickly,” he said.