Online payments company Braintree raises $34M from Accel

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Online and mobile payments company Braintree banked $34 million today in a funding round from Accel Partners. The Chicago-based company got started in 2007 and now claims a $3 billion run rate in transaction volume. This marks Braintree’s first institutional round of funding.

The company works with more than 2,000 merchants, including daily deals site LivingSocial, vacation rental site Airbnb, online restaurant reservation site OpenTable and mobile reservation company GoMobo.

Braintree was founded by CEO Bryan Johnson, who started “a few different companies” before becoming a door-to-door salesman for credit card processors. That’s when he got the idea for Braintree.

“We believe the payments industry is undergoing a transformative change as significant as what occurred with Netflix and Blockbuster,” said Johnson in the company’s (untraditionally written, slightly entertaining) press release. “We believe that the industry will consolidate dramatically and payments will be bundled with a larger set of services.”

Braintree CTO Dan Manges is a former Geek Squad member and was a consultant for ThoughtWorks in Chicago.

“We differentiate from competitors with our technology,” says Manges in a phone interview with VentureBeat. “Most online payment companies use API’s developed in the 1990’s. We’re giving developers client libraries in a variety of programing languages to help move our technology forward.”

Manges says another differentiator is their customer support.

“We’re the ones answering our phones,” he says. This is something VentureBeat can attest to, since we got a hold of Manges with one phone call.

CTO Manges also says their business practice makes them unique.

“Unfortunately the payment industry is plagued by hidden fees,” he says. “We’ve been critics of that since we got started. Costco is an example of this. Their advertised credit card processing fees come with lots of fineprint. Also, if a merchent wants to leave some payment companies, they will find their credit card data is held hostage. We’re advocating a portability standard for credit card data. Many merchants don’t know to ask for this kind of portability.”

Braintree calls out Costco for their hidden fees in a company blog post.

CEO Johnson says Braintree bootstrapped for four years until meeting with Accel (no Angel investors, no friends and family funding, nada). Ryan Sweeney, a partner at Accel, is now on Braintree’s board.

“Braintree caught our attention when we realized the vast majority of our portfolio companies were turning to them for payments,” said Sweeny in the Braintree release. “We’re backing a team that has accomplished a tremendous amount with very few resources.”

Braintree hopes to use the funding to improve its core products and “pursue exciting opportunities in payments.”