If you’ve ever tried to start a company, the greatest hurdle is usually money. Where to get the money? How to handle it? How to transfer funds? Banks do their best to streamline this process for the modern company, but are held back by outdated techniques and policies. And then there are the fees.
Startups are like mushrooms, they can blow up overnight. Suddenly, a company can grow from a ten man team to a hundred in less than 6 months. Scaling everything is a major issue in these times and a company’s success depends on how well it can grow without any hitch. There are many things that can go wrong. But Mercury Bank for startups makes sure that with one factor won’t fail you: banking.
Banking is easily the most annoying part of setting up a company. The paperwork is long and tedious. Filling in form after form while a bank employee tries to explain a non-transparent process. After everything is completed, there is the exorbitant fees. This is especially for international transactions. And startups today are international. Mercury founders were in the same boat. They built Mercury to address these problems.
Mercury bank of USA is built specifically with tech startups in mind. It provides banking that scales with your company. Mercury bank is an up-and-comer backed by serious names. Their investors include Adreesen Horowitz, L2 Ventures, Svangel, Quiet Ventures and even individual investors from YCombinator, Instacart, AngelList, Airtable among others.
So let’s see what the Mercury Bank has to offer?
What is Mercury Bank exactly?
Mercury is a bank for startups that provides –
- A checking account
- A savings bank account with 1-2% earnings
- Debit card
- ACH payments
- Check payments
- Domestic and International wire transfers
- Helpful tools and features to track your money
- FDIC insured deposits
Brass tacks: How much does it cost?
What’s the damage to your wallet? Nothing! Mercury Bank is free.
- No minimum balance
- No opening account fees
- No monthly fees
You only pay for wire transfers, and even that has a flat fee of $5 domestically (in the US) and $35 internationally.
Do they accept all types of companies?
Mercury has some restrictions when it comes to the type of industries that they will support. If you are one of the following businesses, I’m afraid you can’t apply for an account.
- Money services business
- Adult entertainment
- Marijuana Industries
- Internet gambling
This is nothing personal. Companies like these deal with cash and are not suited to this type of business process. Mercury works best for Tech companies.
What documents are required?
There is only one condition to apply for this bank account. You will be required to have a company registered in the US with a federal EIN (Employer Identification Number). Along with that you will need to present your company’s articles of incorporation and a picture of your government ID (a passport or driver’s license should do).
While this may sound like a difficult task for someone outside the US, it is rather easy to do. You can setup a US company remotely with just few hundred dollars. If you plan to raise funding Delaware is the state you register. If you do not have plan to raise third party funding I recommend registering in Wyoming. If you need help, feel free to contact me.
Earlier, while setting up a business was easy, opening a bank account proved to be extremely complicated involving further registration and increased fees. Mercury Bank takes away this complication, allowing you to work, function and transact as a US based company.
If you’re worried that the Mercury Bank won’t like this, they have made their position quite clear. In their words, “We are proud to support US companies founded by people from across the globe.”
How good are the security features?
This is a very valid question today. Everyone claims to be secure but a rash of malware making the rounds have cast doubt on security claims. One cannot be too careful these days, especially if monetary transactions are involved. Mercury Bank protects against internet-based threats with the following technologies
- HTTPS/HSTS on all pages
This feature makes sure that any communication (logins, form filling, etc.) cannot be seen during the transit between your browser and the server. It is resilient against a large number of attacks.
- Third Party Pentesting Every Year
Security experts try to break into the systems to find vulnerabilities. If any breaches are found, they are quickly patched
- Hashed Passwords
Passwords are stored in a hashed form using the Bcrypt algorithm. Hashes work by converting your passwords into a jumble of words and numbers that cannot be converted back into the original password. It also sprinkles random characters in random places in the hash. This is called salting. Bcrypt is safer and more efficient than the current mainstream cryptographic algorithms. In short, even Mercury Bank cannot see your password.
- Time-based OTP’s
Two factor authentication is enabled by default. You will need to use an app like google authenticator that generates One-Time-Passwords that last for a few seconds. Authentication is never sent over insecure SMS.
- Database Encryption
Security is tightened with encrypted databases. Sensitive information undergoes further encryption. They also never store your debit card number.
Where is my money?
An important question in these situations is “Where are the funds stored?” Mercury Bank with FDIC-insured banks like BBVA compass and Evolve Banks & Trust to store your deposits. So your funds will be stored in the US. For more information on this go to mercury.co/legal.
Plaid? What’s Plaid?
Plaid is a service that allows a user to connect securely to bank accounts. Mercury Bank uses plaid to connect any other accounts to your Mercury Bank account.
Can I send checks?
You can send checks through your Mercury bank dashboard. They are completely free!
Do I get a debit card?
Yes you get a debit card free of cost. However this debit card will be shipped only within US. You can always use a mail forwarding service to get it shipped internationally.
What about cash? Can I deposit cash?
They don’t currently support cash deposits as they are more focused on the electronic monetary transactions.
Moreover if you are a tech business, you would rarely need cash deposits and withdrawals.
What about wire transfers?
These are the only services that will cost you. But it is a flat $5 wire transfers within the US and $35 for wire transfers internationally.
Silicon Valley Bank I have used charges $25 for international wire transfers, so this amount is slightly higher. You can always use third party services like Zoom or Transferwise to get better rates.
What’s Mercury Tea Room?
This is an advantage or privilege club of Mercury. This is where companies and individuals can come together to discuss ideas, businesses and deals. Everyone knows that networking is the most important part of any business. Mercury Tea Room gives companies a virtual place to connect with other customers.
Mercury has a culture of serving each other tea in their office and thought it’d be nice if they could share that with the companies they work with. Mercury Tea Room is a metaphorical way of accomplishing that. The goal is to help every startup into the Mercury Tea Room and serve a cup of tea, along with other great perks.
How does one get into the Mercury Tea Room?
Either hold a balance of more than $250,000 in your Mercury checking account, or get invited in by a Tea Room member.
What do I get in Mercury Tea Room?
Mercury Tea Room customers earn 1.75% on deposits in their savings account. As the name suggests, they also get free tea every once in a while.
They also have partner rewards for things like bookkeeping, servers, and 409 as for Tea Room customers. If you’d like to know more about the above items or need help finding other providers for your business, get in touch at [email protected]
History of Mercury Startup Bank
Mercury was founded by Immad Akhund, Max Tagher, and Jason Zhang. The three previously worked together at Heyzap, which sold for $45 million in 2016. Mercury has a small team of dedicated employees.
Mercury is Akhund’s third startup, and it was inspired by the frustration he and his founders encountered firsthand with previous business banks.
From a blog post announcing the release of Mercury, Immad writes –
I founded three startups in the 13 years prior to starting Mercury, and the banks I used executed these functions in pretty haphazard fashion. I ended up having to figure out a lot of it myself through a mix of spreadsheets and patched-together processes. I had to call in to send a wire and gather my co-founders at a branch for a couple hours to open an account. Getting a savings account with any interest, if it was possible at all, would usually take extensive back and forth negotiation and result in earning fractions of a percentage point. And I couldn’t rely on the banks to get any clarity into company finances; usually I’d be pulling up spreadsheets or throwing together an ugly admin page.
The last thing I wanted to do as a founder was log in to my old bank or interact with it in any way. We hope to turn that on its head and make logging into your bank the first thing you want to do every morning.
Mercury raised a seed round of $6 million from Andreessen Horowitz in August 2017 and has been quietly building the product since then. Rivals include Silicon Valley Bank and Wells Fargo.
More than 3 million businesses are created annually in the United States, and banking those businesses is a $400 billion industry. But existing banks have little incentive to innovate when competition is low and the industry is ruled by a small number of major players, Akhund said.
Launch day April 18th 2019
“We’re excited to launch Mercury out of private alpha today. Our vision is to deliver a great bank to startups that helps them succeed.”
Mercury bank for startups as a product has three main components:
User Interface: Startups need to be able to access and do things with the money they have, ideally with some level of efficiency.
The most important question was how to make a great UI. They came up with things like a three-click send money flow, fully-indexed transactions that are searchable and filterable, and routing and account number displayed in a logical location. This also extends to having quick, competent customer support and providing great APIs to let customers build things on top of their Mercury account.
Financial Services: Startups usually have raised money or are making money. They should have transparent and responsible ways to make smart decisions with their capital.
To begin with, access to savings accounts that earn either 1 or 2% on deposits to everyone that signs up. Down the line, they hope to be providing further ways to maximize how much a customer makes on deposits (“treasury management”) and startup-friendly loans.
Company Insight: Banks have all the data on what’s happening in your company. Companies should be able to access that data and see their financial health from a central HUD.
Right now, they have basic analytics tools. The short term roadmap includes expanding these and also integrating across the customers’ financial stack (e.g. Stripe, Square, Gusto) so you can visualize what’s happening with your company with one click.
How to get an US Bank account remotely?
Click on signup on the Mercury.co website.
Fill in your Company account and bank details
Your account will be ready to use in matter of days.
Mercury is truly a bank for startups. It prioritizes the efficiency of the startup rather than the bureaucracy of a bank. It takes less than 10 minutes to sign up for an account and 2 hours to get activated. Here is a banking product that moves at the same pace as the startup.
By streamlining the banking process into a viable product, Mercury has achieved a balance between efficiency and beauty. The main goal was to make people want to log into their bank accounts every morning. I would say that they have achieved this spectacularly!
Are you a startup looking for a good bank to fund operations? Mercury bank provides you an instant bank account in the US! Get onboard now.