Car:Go had some initial success, but things have quickly unraveled, and now the business is in a desperate battle for its survival. According to Guberinic, this is due to the actions of Braintree Payments – the Paypal-owned company it uses to process credit cards.
He alleges Braintree Payments transferred money to a bank account that was no longer under the control of the company, after he issued a notice to cease disbursements to that particular bank account.
In addition, Guberinic also claims that Braintree Payments has failed to issue monthly card payment disbursements for the past two months. This starvation of funds has forced him to suspend operations, as he is unable to pay drivers and employees, essentially grounding a once-successful taxi startup.
According to Guberinic, the saga started when he discovered that his EU-based business partner had been embezzling funds from the company.
As Braintree Payments isn’t available in Serbia, Car:Go was forced to use an EU-based partner in order to register for the service.
After Guberinic noticed money going missing, he sent Braintree a warning email to stop further disbursements. He says this was acknowledged by the company in writing.
Despite this, a further disbursement of €12,000 was sent to the EU-based account, against Guberinic’s instructions. At the time of writing, Car:Go has been unable to recover this sum.
Emails obtained by TNW showed Braintree Payments acknowledging the payment was sent, but Braintree denying they did anything improper, saying it was disbursed to a “a legitimate bank account which was provided at the time of application.”
The representative also added: “This case was reviewed at the highest level of EMEA Account Management. I apologize if you found the messaging to be unsatisfactory, but the funds were disbursed to a bank account you provided. Our payment services agreement does not guarantee the ability to hold a merchant’s funds upon request.”
After Car:Go broke ties with its EU-based partner, it launched a UK-based subsidiary in order to handle payments. This used the WorldCore service, in order to receive disbursements from Braintree.
To date, Guberinic says that he is yet to receive a single disbursement of funds.
In addition to the €12,000 it transferred to the former business partner, he claims that Braintree has failed to transfer €15,000 owed to Car:Go.
In an email to Braintree Payments, an emotional Guberinic said: “I had to borrow this equivalent amount of money (€27 K) to keep things alive, as you and your colleagues have assured me everything will be ok and so on, and in the past month you have not provided me a single document that payments went out at all, let alone that they came back!”
Reflecting the somewhat haphazard payments ecosystem in Serbia, Car:Go allowed its users to pay for rides using five different methods. This includes bank transfers, pre-paid vouchers (similar to GreenDot’s MoneyPak), and ironically, PayPal.
But card payments, processed through Braintree Payments, represented 70 percent of all revenue. As a result, Car:Go is now faced with a financial black-hole that it is unable to plug. As a result, the company has been forced to suspend operations.
Speaking over Facebook Messenger, Guberinic said that while he would like to switch the company’s payment system to Stripe, this would require some development work. As he is currently unable to pay the company’s programmers, that simply isn’t possible.
The Next Web reached out to Braintree Payments over email with a request for comment. While the company acknowledged our email, it has not issued a response to any of our questions at the time of publication. This post will be updated if Braintree comments.
UPDATE: Braintree Payments just issued a statement.
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.