Startups succeed and fail for various reasons, but frequently they don’t fail because their payment provider wouldn’t issue their money. A Serbian taxi startup, Car: Go, is based in Belgrade which doesn’t have Uber or Lyft. His successful startup recently failed because Braintree Payments wasn’t issuing money promptly. At least this is what the founder, Vuk Guberinic, claims in a long Facebook status.
Car: Go used Braintree Payments to process their credit card payments through the app. What he alleges is Braintree issued payments to a bank account he no longer had access to. Braintree also failed to distribute the past two months of card payments, essentially starving the company of all their money. The lack of money means the company cannot pay developers, drivers, or their server providers. It’s brought the successful taxi startup to its knees.
The whole story around Braintree payments and Car: Go isn’t that simple. A lot is going on internally causing the problems.
Car: Go poorly managed their Braintree account and entrusted the wrong business partners
I’m not going to defend Braintree or Paypal which ones Braintree, but I’m directing the problems to poor management.Here’s what happened: Braintree payments doesn’t operate in Serbia, leaving Vuk to use an EU-based business partner to set up the accounts for the credit card processing. That EU-based business partner started embezzling money from the company which began the series of events leading up to this Facebook status. Vuk issued a cease order to prevent Braintree from releasing any more funds to the EU-based bank accounts. Braintree did acknowledge the written letter but still transferred the €12,000 owed to the company to the EU-based business partner. Vuk still hasn’t been able to recover the money, and which lead to the downfall of the company.
Vuk has now set up payments with a UK-based subsidiary to handle payments, but Vuk is still out a lot of money. Braintree issued a statement around the events, but it leaves a lot of questions unanswered:
We support thousands of European merchants across a wide range of businesses every single day. This merchant had a particularly complicated business situation, and ultimately delivered service from a country which we do not yet actively support. We have been in regular communication with the merchant, working together to find a positive outcome in compliance with applicable laws and regulations, and to deliver any outstanding funds. We strive to exceed merchant expectations, and will continue to work on options for this merchant.
If Vuk discovered his EU-based business partner was embezzling money did he report the findings to the police? Why hasn’t Vuk provided the evidence to Braintree to stop funds to the old bank account, and issue them to a more current bank account? If you’ve even experienced a banking problem, you’ll know when releasing funds to an account you cannot take the transfer back unless it’s an extreme case. Even if Vuk was using an EU-based business partner, why didn’t he have access to the Braintree account to change the bank info?
Car: Go is in a financial black hole
Car: Go doesn’t have anywhere to go here so that lead them to air a public grievance against Braintree. Dealing with financial institutions isn’t easy, but operating in a region they don’t actively support is asking for trouble. Vuk wants to change from Braintree to Stripe, but he’s unable to pay his developers to make the change. All of this leaves Car: Go in a strange place of success and being pigeon hold by their payment provider. They also put trust in the wrong partners.
What do you think? I understand Vuk airing his problems publicly. The Facebook post has been shared across Facebook hundreds of times and has a lot of attention around it now. Should Braintree help Car: Go to recover their money or did Braintree not do anything wrong? Tell us your thoughts in the comments below!