Capmark Financial Group’s newly combined companies generated more than $1 billion in 2014 e-commerce sales.
Braintree uses transaction data across thousands of clients to detect fraud.
Braintree Payment Solutions LLC, a payments processor for thousands of merchants including flash-sale retailer Fab.com, No. 150 in the 2013 Internet Retailer Top 500, has launched a new online payments-security and fraud-detection service designed for small retailers.
Braintree, which until now has only offered custom payment-security services for larger retailers and companies, says it’s now offering fraud screening to small start-up retailers as well as those with annual sales of hundreds of millions of dollars. In addition to retailers like Fab.com, its clientele includes new Internet businesses such as Uber, an online service that matches ride-seeking people with taxi cabs and other car services. Braintree analyzes purchasing behavior across its thousands of merchant clients to identify patterns that are commonly tied to fraudulent transactions. Braintree then uses that data to create rules to flag transactions as possibly fraudulent.
“Our experience in processing more than $10 billion of online and mobile commerce annually has given us the data and expertise needed to deliver comprehensive tools that further protect our merchants and stop fraud,” Braintree CEO Bill Ready says. “Fraud is not a problem limited to large merchants. Our goal is to provide startups everything they need to grow and scale, including fraud protection."
Ready says that of the $10 billion in transactions Braintree processes annually, 25% are outside of the United States and the total includes more than $2 billion in mobile payments. The company says it processes transactions annually for more than 40 million consumers and more than 4,000 merchants across more than 40 countries.
Braintree is offering the new payment-security services for no extra charge to Braintree clients who use the vendor’s payment-processing services. The security services enable merchants to identify risky behavior, such as repeated attempts to log on to pay with a customer’s stored payment card or transactions coming from Internet access devices flagged as being associated with past fraudulent transactions. “We’ve been baking this into our platform for a long time,” Ready says. “Some of these things we’ve been doing with larger merchants, but we now can take these applications to all clients.” Braintree’s payment processing fees start at 2.9% of each transaction value plus 30 cents per transaction.
Clients of Braintree’s customized risk-management services, for which the company charges additional fees, have more flexibility in setting levels of risk tolerance. For example, if a merchant sells digital goods, it may accept a higher level of risk because product theft wouldn’t actually result in lost inventory, Ready says.
Jordan McKee, an industry analyst who covers mobile payments and commerce strategies at research and advisory firm Yankee Group, says Braintree is offering risk-management services that are unique in their ability to work for online merchants of all sizes. “With startups continuing to rush into the mobile space, fraudsters are rapidly taking notice,” he says. “As a result, the need for powerful, yet easy to employ, security solutions are increasing in importance. Solutions like Braintree's that are designed to benefit fraud-prone and unprotected small merchants help to fill the gap.”
McKee adds that the value of Braintree’s risk-management services will increase as it signs up more merchants of all sizes. “By looking at purchase behavior across multiple merchants of various sizes and types, a much more vivid picture of the consumer is painted,” he says. “This aids greatly in helping to pinpoint where instances of fraud may be occurring. This model is based on the network effect. As more merchants sign up, the accuracy and value of Braintree's solution increases.”