braintree.rb

if Rails.env.production?
  Braintree::Configuration.environment = Rails.env.staging? ? :sandbox : :production
  Braintree::Configuration.merchant_id = ENV["braintree_merchant_id"]
  Braintree::Configuration.public_key  = ENV["braintree_public_key"]
  Braintree::Configuration.private_key = ENV["braintree_private_key"]
else
  Braintree::Configuration.environment = :sandbox
  Braintree::Configuration.merchant_id = "<super secret>"
  Braintree::Configuration.public_key  = "<super secret>"
  Braintree::Configuration.private_key = "<super secret>"
end

braintree_test_app.rb

if Rails.env.test?
  ::Rails.application.config.middleware.use BraintreeTestApp
end

class BraintreeTestApp
  def initialize(app)
    @app = app
  end
  
  def call(env)
    @env = env
    config = Braintree::Configuration.instantiate
    if request.path =~ /\/merchants\/#{config.merchant_id}\/transparent_redirect_requests$/ 
      #proxy post to braintree
      uri = URI.parse(config.protocol + "://" + config.server + ":" + 
        config.port.to_s + request.path)
      http = Net::HTTP.new(uri.host, uri.port)
      http.use_ssl = true
      res = http.post(uri.path, request.body.read)

      if res.code == "303"
        header_hash = res.header.to_hash
        header_hash["location"].first.gsub!("http://localhost:3000/", "http://www.example.com/")
        [303, {"location" => header_hash["location"].first}, ""]
      else
        raise "unexpected response from Braintree: expected a 303"
      end
    else
      @app.call(env)
    end
  end

  def request
    @request = Rack::Request.new(@env)
  end
end

hack_rack.rb

module Rack
  module Utils
    def parse_nested_query(qs, d = nil)
      params = ActiveSupport::OrderedHash.new

      (qs || '').split(d ? /[#{d}] */n : DEFAULT_SEP).each do |p|
        k, v = unescape(p).split('=', 2)
        normalize_params(params, k, v)
      end

      return params
    end
  end
end

module Rack
  module Test
    class Session
      alias_method :old_env_for, :env_for

      def env_for(path, env)
        if env[:params] && env[:params].empty?
          env[:params] = ActiveSupport::OrderedHash.new
        end

        old_env_for(path, env)
      end
    end
  end
end

new.html.erb

<%= simple_form_for @braintree_customer, 
  :as   => :customer, 
  :url  => Braintree::TransparentRedirect.url,
  :html => {:class => "form"} do |f| %>

  <%= f.input :first_name, :required => true %>
  <%= f.input :last_name, :required => true %>
  <%= f.input :email, :required => true %>

  <%= f.fields_for :credit_card, @braintree_customer.credit_card do |cc| -%>
    <%= cc.input :number,
      :input_html => {:autocomplete => "off" },
      :wrapper_html => {:class => "credit_card_number"},
      :hint => image_tag("/images/cards_accepted.png", :alt => "MasterCard, Visa") %>
    <%= cc.input :expiration_month, :collection => 1..12,
      :required     => true,
      :wrapper_html => {:class => "expiration_month"}  %>
    <%= cc.input :expiration_year, 
      :wrapper_html => {:class => "expiration_year"},
      :collection => Time.zone.now.year..(Time.zone.now.year + 25) %>

    <%= cc.input :cvv,
      :input_html   => {:autocomplete => "off" },
      :required     => true,
      :wrapper_html => {:class => "cvv"} %>
  <%- end -%>

  <%= hidden_field_tag :tr_data, @braintree_customer.redirect_data %>
  
  <%= f.button :submit %>
  
<%- end -%>

schema_change.rb

add_column :accounts, :payment_processor_subscription_id, :integer

vcr.rb

VCR.config do |c|
  c.cassette_library_dir = 'features/cassettes'
  c.stub_with :webmock
  c.default_cassette_options = { :record => :new_episodes }
end

VCR.cucumber_tags do |t|
  t.tags '@braintree_valid', 
    '@braintree_invalid', 
    '@braintree_valid_bad_account'
end

vcr_2_point_oh.rb

VCR.config do |c|
  c.cassette_library_dir = 'features/cassettes'
  c.stub_with :webmock
  braintree_config = Braintree::Configuration.instantiate
  c.default_cassette_options = { :record => :new_episodes, :erb => {
    :braintree_merchant_id => braintree_config.merchant_id,
    :braintree_public_key  => braintree_config.public_key,
    :braintree_private_key => braintree_config.private_key
  } }
end

module VcrHelper
  def self.obscure_credentials
    braintree_config = Braintree::Configuration.instantiate
    [
      "spec/cassettes/**/*.yml",
      "features/cassettes/**/*.yml"
    ].each do |glob|
      Dir.glob(Rails.root.join(glob)).each do |f|
        contents = File.read(f)
        File.open(f, "w") do |j|
          j << contents.gsub(CGI.escape(braintree_config.merchant_id), "<%= braintree_merchant_id  %>").
            gsub(CGI.escape(braintree_config.public_key), "<%= braintree_public_key %>").
            gsub(CGI.escape(braintree_config.private_key), "<%= braintree_private_key %>")
        end
      end
    end
  end
end


at_exit do
  VcrHelper.obscure_credentials
end

I think there is a mistake in your example:

if Rails.env.production?
  Braintree::Configuration.environment = Rails.env.staging? ? :sandbox : :production
  ...
else
  ...
end

Shouldn't that line just be

Braintree::Configuration.environment = :production

There can only be one active environment at any given time.

no that's a ternary operator basically if the equivalent of

  if Rails.env.staging?
    Braintree::Configuration.environment = :sandbox
  else
    Braintree::Configuration.environment = :production
  end

I'm well aware of the ternary operator. Maybe you didn't see this part of my comment:

There can only be one active environment at any given time.

If execution falls through the if Rails.env.production? branch, Rails.env.staging? will always return false, right? So in your gist, :production would always be the outcome. That's why I said you might as well just hard-code it to :production.

Sorry, made a typo in my previous comment. I've updated it.

hoverlover is correct, this would not actually work right. Saying "if not Rails.env.test?" in the first check would give the effect the author wants.