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PayPal spends $800M to acquire the startup that accused it of screwing customers

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Braintree nailed mobile commerce and openly criticized PayPal


This morning eBay, PayPal's parent company, announced that it was acquiring Braintree for $800 million in cash. Braintree built a platform that powered payments on the web and mobile devices. It had a lot of success getting business from popular mobile apps and was processing more than $10 billion a year for companies like Uber, Fab, and Airbnb. Discussing the deal, eBay president John Donahoe said that Braintree was a perfect fit for the work PayPal is already doing, but the two companies weren't always so cordial with one another.

"We've all heard the horror stories about people who got screwed by PayPal."

Last October, when The Verge reported that Braintree had raised $35 million in venture capital funding, Braintree CEO Bill Ready told us that "we are building the new generation of mobile payments, the company Paypal should have built, but didn't. We've all heard the horror stories about people who got screwed by PayPal. We want to make sure people come to us before that happens, not after."

A number of developers discussing the story on the website Hacker News this morning expressed concerns over the deal. "As a Braintree customer I am a little worried," wrote Tom Medley. "I went with them for a number of reasons, but one of the big ones was the fact that they're not PayPal." Several suggested switching off Braintree immediately, but others felt stuck. "We just signed up with Braintree the other day trying to flee PayPal," wrote PayMo CEO Jan Lukacs. "Let's hope for the best."

PayPal now owns a big foothold in the world of in-app commerce, as well as a popular consumer-facing payments app, Venmo, which was acquired by Braintree last year. The logic of the purchase was clear. The challenge for PayPal now is to hold on to the goodwill these brands created and avoid the stigma they were not-so-subtly helping to reinforce.