Today’s news that eBay’s PayPal is buying Braintree for $800 million in cash will open the door to Braintree taking its developer-focused payments platform to more markets and with more services. PayPal, meanwhile, will use Braintree to build out its ambition to be, in the words of PayPal President David Marcus (pictured, right), “the payment OS” for all transactions, not just those directly through PayPal’s own retail services. After the deal was announced, Marcus and Braintree CEO Bill Ready (shaking Marcus’ hand in the photo) talked to us about how the two companies will coexist and what their ambitions will be longer term.

Branding, operations separate for now to keep their eyes on the developer prize

Although Ready is reporting up to Marcus in the bigger operation, Ready will continue to run Braintree effectively as a separate operation after the sale is completed. “Braintree will report to Bill and Bill will report to me,” Marcus said today. “But it’s not our intention to integrate Braintree with PayPal. On branding, we’ll see what happens but it will remain what it is for now.” Ready says that around 200 people work for Braintree today, and all of them are coming over in the deal, but only in contract: they will remain in their current Chicago headquarters after the sale.

Part of the emphasis on separate operations is because PayPal doesn’t want to ruin a good thing: Braintree has become one of the bigger payments platform in the developer community, with some of the more interesting leaders in the newest generation of online transactions — car service Uber and Airbnb among them — using it for some $12 billion in transactions annually, $4 billion on mobile. While PayPal definitely wants to build up that part of its business, it’s all too aware of past perceptions of the company.

“To put it mildly, PayPal didn’t serve developers well for a while,” admitted Marcus today. “We want to ensure them now that the Braintree experience will only be amplified and possibly improved, but it won’t be degraded. The independence that I want to give Braintree for risk modelling and its white-glove service. If you have an issue you can pick up the phone and that is different from what we’ve done at PayPal.” By this he is referring to what Braintree calls its “white-glove” service, with a very hands-on approach to risk management and other services.

“I want to keep perpetuating that offering to customers,” Marcus continued. “The only thing that is going to change is that you will have more countries where Braintree will be available and it will be augmented, but in no way will the policies or customer service change. At the end of the day that’s what developers want and I feel really passionate about winning developers’ hearts again.”

For his part, Ready has already been seeing some backlash against the deal, even before any news was made official.

It’s all in the APIs

But to say that PayPal is simply bolting on Braintree to its existing business is not quite accurate, either.

A couple of times in our conversation today, both Marcus and Ready pointed to APIs and how these would be the initial bridge between the two operations.

Braintree’s API has been the killer component in how it has become embedded so quicky in third-party applications, and Ready today emphasized that “it was important to us that the API we built will continue onward.”

But it looks like PayPal might try to bring some of its services into that framework. “We are going to enable Braintree to run their business at a greater scale and in more countries,” said Marcus, “and with access to our APIs to incorporate Braintree with the PayPal branded experience.”

Again, specifics and timing for how this would work was not laid out today. “We can’t commit to dates right now because the acquisition needs to close first, ASAP as far as we are concerned,” said Marcus. “In the meantime we’ll think about how fast we can move… We don’t want to do anything that slows them down.”

Other offers, and going the acquisition route

We had earlier reported that Square had also approached Braintree with offers from some interested parties of around $1 billion for Braintree, before PayPal sealed the deal. No comment directly on Square or any others that may have approached Braintree today, but Ready did say that “a lot of people knocked on our door.” He added that going with PayPal wasn’t about “who offered the most dollars, but where could we go and build for the next decade of commerce.”

With Braintree clearly on a high growth trajectory at the moment and with valuations that were reaching into 10 figures, it’s noteworthy that the startup decided to move under the wings of a bigger player rather than go it alone. This speaks to the fact that despite the fast growth in e-commerce, it is still a relatively small piece of the pie — retail e-commerce as we pointed out the other day — was only 5% of all retail sales in the U.S. in the last quarter, for example. And with margins on e-commerce transactions remaining small, the route to success lies in scale.

Indeed, it’s something that Marcus notes as well in his blog post explaining the rationale for the deal, the biggest it appears that he has made at PayPal. “In the crowded payments space, most have a long way to go before they actually deliver useful solutions at the scale that’s required,” he writes. Today, he echoed the same sentiment: “It’s really hard to scale payments globally. Compliance and different payment types make it hard. But I think the key thing here is that we’re all here payments geeks and passionate about revolutionizing that.” He points out that it was the same thing that motivated him to let eBay buy his own mobile payments startup, Zong.

Ready realized at some point that becoming part of a bigger company was the way to get to where Braintree wanted to be: “We didn’t ‘decide to go the acquisition route,’ but we realised what we wanted to build was a whole new wave of commerce experiences… how do we best give developers the tools to build these?”

On PayPal’s side, picking up startups is an important way to force the bigger company to remain innovative. “There is a transformation at PayPal right now,” says Marcus. “We are entrepreneurs, and we like challenges.”

Venmo

We earlier reported that we’d heard that one of the key attractions for PayPal was Venmo, the mobile payments business Braintree acquired last year for $26.2 million. Today Marcus confirmed that this is the case, with Venmo part of how PayPal hopes to become more of a payment layer in apps, as well as to make a big move into peer-to-peer transactions.

“We love the Venmo Touch experience of paying in one click across different apps,” Marcus said. “And then there is the Venmo app itself. The idea for us is to enable and iterate in the world of person-to-person payments. I don’t have exact details that I can share now, but the idea is that we will make it a groundbreaking environment for P2P. We will scale globally.”

He says that he can’t discuss specific integration plans until the deal is closed, which is currently scheduled for later this year or Q1 next year. So for now, the team will remain independent and stay in New York.

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