Accepting Credit Card Payments via Braintree in Europe

This week I’ve been implementing BrainTree card payments for our WordPress plugin WP RSS Aggregator. We had several reasons for making this move. Here’s a few of them:

• Some people didn’t have money in their PayPal account and it took 3 days to make the transfer from their debit card to PayPal, hence it was much more likely that they would look for another plugin that can be bought via a debit card rather than wait out the 3 days.
• PayPal payments cannot be done from all countries in the world. We’ve had potential clients from Pakistan and other countries in that region who had no way of paying us since they cannot use PayPal.
• Others just don’t like PayPal and prefer using the traditional way of purchasing by entering their debit/credit card information directly on our site rather than create a PayPal account.

Why BrainTree?

Initially I wanted to go with Stripe, however they are not available yet in Malta, so I had to find an alternative solution. Braintree fit the bill perfectly. On September 26, 2013 Braintree was acquired by PayPal, an eBay subsidiary, in a deal worth $800 million. Since we’re already using PayPal successfully, it also made sense to use Braintree.

The process was relatively painless. After a few to and fro emails to get us approved into the BrainTree system, I completed the implementation on the site in less than an hour. Since we are using Easy Digital Downloads as our e-commerce platform, I just had to buy the EDD Braintree add-on, fill in a few fields and activate everything.

Some Important Things to Note

• You can also take PayPal transactions through Braintree. They will cost whatever they cost through PayPal.
• With PayPal whenever you give a full or partial refund, PayPal refunds their commission to you too (excluding the fixed fee which they keep). In Braintree’s case, whether you issue a full refund, or a partial refund, they keep all the fees they originally collected on that transaction. So if you give out full or partial refunds on a frequent basis, you have to be careful with Braintree.
• At the moment Braintree is running a promotion whereby the first EUR 50,000 are fee free.

European pricing for Braintree is 2,9% + €,30 per transaction. There are no monthly fees, and you only pay for what you use — there’s no minimum transaction processing amount.The only fee you might see is if you incur any chargebacks (i.e. a customer disputes a charge). In that case you will be charged €15 for each chargeback incident. With PayPal there are no chargeback fees.

Braintree does not charge foreign exchange fees and European card transactions are not charged cross-border fees. Transactions on cards issued outside of these European countries will be billed at 3.9%. That is in addition to the standard €,30 fixed fee per transaction.

Now lets take a look at European PayPal fees (cross-border, taking a common example where most buyers are in the US and the seller is in the EU):

Here’s a practical example. If your product retails at $15.00 and a US customer bought a copy you will see this in your PayPal account:

Total amount:		$15.00 USD
Fee amount:		-$0.78 USD
Net amount:		$14.22 USD

Now the price per transaction varies as per the table above, but lets assume that your shop is clearing more than 10,000 EUR but less than 50,000 EUR per month, meaning that it will fall in the category of 3.2% + $0.30 USD.

3.2% of $15.00 = $0.48

Then lets add the $0.30 and we get $0.48 + $0.30 – $0.78 USD in total fees from PayPal. You take home $14.22 USD.

So for many vendors, I suspect that Braintree will work out cheaper, as their fee is the equivalent of PayPal’s 50,000+ EUR tier which is hard to reach for small businesses and individual freelancers.

All funds processed through Braintree are settled in daily batches (Monday-Friday) and are automatically sent to your business bank account within 48 hours. For European businesses Braintree require that this bank account is a European bank account.

You are able to choose the funds you would like to charge your customers in and receive funds in. If you would like to have a USD set-up and settle funds into your bank account in USD Braintree can do this without conversion. If you would like funds to be in EUR they can do this as well! It is more or less up to you how you would like it set-up.

Reconciliation Process for Braintree

An important thing you or your accountant will be doing at least every month is a full reconciliation of the transactions that have gone through Braintree and the debits and credits to your associated bank account.

The best way to reconcile your debits and deposits is to look at the Settlement Batch Summary and your monthly statement. The Settlement Batch Summary will show the net settlement for that day. This amount, minus fees, will be deposited or debited from your bank account, however fee totals are not available in the gateway.

For merchants on flat rate pricing, fees can be easily calculated using the Settlement Batch Summary totals. Merchants on interchange pricing models can view their fees on their monthly statement. The monthly statement will show the total aggregate fees for that month and the amount funded to your bank account. A statement guide is available here.

I’ll keep updating this post with more insights as I go along.

Update: 25/12/14

It’s been a few weeks since I’ve started using Braintree on my site and the results have been good. Here is some insight on these first few purchases that have gone through.

Visa card payments are exactly double those from Mastercard. These are the two cards I can accept at the moment through Braintree.

Around 40% of payments are now coming through Braintree and the rest come through Paypal. Before introducing Braintree all my transactions were processed by Paypal. This change has not brought about an increase in total sales yet, but I will have to revisit this at a later stage since December is traditionally a slow month. January and February should give us a better indication on whether introducing credit card payments actually boosted sales or not (which was mostly the whole point of introducing this facility).