Why did eBay acquire Braintree competing with its affiliated PayPal

ByMy Flickr 30

A leading Internet shopping and auction companyEBayIn September 2013, the settlement platform used by online and mobile start-up companiesBraintreeFor $ 800 million (about 80 billion yen). What does this acquisition plays that eBay, which already owns PayPal and has online payment function, made it?

Credit Card Processing is a Hard Business
http://blog.zactownsend.com/thoughts-on-braintree-paypal-stripe-and-payment-processing

"Credit card processing business is no longer a commodity business that has become homogeneous," Zachary Townsend said about the problems of credit card payment service companies.Standard TreasuryCo-founder of the company, funds to companies that have just founded "Angel investorsIt is one of the people.


According to Mr. Huang, even a credit card payment service company offering "2.9% of transaction amount" as a settlement fee, in fact, most of the profits are actually absorbed by related banks in the flow of the settlement network And profits will decrease. Also,Pareto's lawMost settlement processing is occupied by some major customers as shown in the figure, and further profit is compressed due to the special discount rate applied at that time. As a result, the last remaining profit margin is smallAbout 0.5%And it will be very low.

ByAndy Thornley

If PayPal handled credit card payments last year for about 145 billion dollars (about 14.5 trillion yen), if profit margin obtained from this is 0.5% ... ... that amount is only 724 million It is dollar (about 71.3 billion yen), which is inconsequential for PayPal. In fact, the profit earned by PayPal in 2012 was $ 5.6 billion (about 550 billion yen), but many of themACH(Electronic check for individual payment). As you can see, credit card processing business has little "umami". This is because a large amount of capital investment is required for low sales and major companies are caught out most of the profits.

Last year, Braintree, which was acquired this time, processed 12 billion dollars (about 1.2 trillion yen) in fields other than credit card payment, and the estimated net profit was estimated to be around 60 million dollars (about 6 billion yen) However, Townsend is skeptical about its prospects. Online payment application provided by the company "VenmoEven if you estimate the value of a big deal, there is doubt that the purchase price is too high.

BySustainUS

Mr. Townsend is concerned about Braintree's new customers andGitHubYaAirbnbIt is a fact that has established a big gap between the conditions of major companies such as. Because the settlement conditions that the company offers are too strict for new entrants,StripeThere is a tendency to leak out to services that offer better trading rates like companies do.

Since the acquisition, many questions have been given to Mr. Townsend as "What is the impact of this acquisition on Stripe?" Mr. Townsend, who used to work with the company before, said, "Stripe has the best system but my answer is" yes "and" no. "For the next few months, Stripe has a large We will benefit from the flow of customers first. "

On the other hand, he says that the market value of Stripe may remain short-term. Although Stripe shows higher growth than many venture capital companies, the annual processing volume remains at only 1 billion dollars (about 98 billion yen) level. If Braintree's settlement amount is truly $ 12 billion (about 1.2 trillion yen), it is said that the market value of Stripe will eventually be lowered. Because Stripe owns a large amount of cash, it is thought that the impact is limited, but this acquisition plays represents how tough competition the online payment business world is exposed I talk about it.

ByGlobalRepat

Finally, Mr. Townsend says that there are two interesting fields remaining in the field of the strict prospective credit card payment business. One is that individuals rent a room with each otherAirbnbYou can make a reservation for a taxi or a hireUber, Event planning and selling ticketsEventbriteServices that are both enhancing online and mobile services. On the other hand,CredoraxIt is said that it is a company that can offer a wide range of payment services as provided by the company.