Mercury offers digital banking services aimed at start-ups and tech-based businesses. Does your company primarily deal with online transactions as opposed to physical cash? If so, you may want to read through this Mercury Bank review to learn about their no-fee, customizable platform.
Mercury Bank provides all the usual digital banking services, including a checking account and savings account automatically to each user, various financial tools, and full developer API access to customize their account. Currently, their services are not available to sole proprietors or trusts, and businesses cannot deposit cash into their accounts.
By offering low-cost, customizable banking services for their customer niche, Mercury fills a gap in the digital banking marketplace. Other companies can apply but may not get as much out of their services.
In April 2019, Immad Akhund, Max Tagher, and Jason Zhang, backed by lead investor Andreessen Horowitz, a U.S. venture capital firm and partner bank Evolve Bank & Trust, created Mercury Bank as a new kind of digital bank platform, aiming to provide for a particular clientele: the tech company and growing start-up.
What is Special About Mercury Bank?
- No minimum deposit to open an account; no monthly fees or hidden fees
- Savings and checking account included together automatically with controls in one place
- Option to upgrade to the Tea Room Account (requires $250,000 minimum in deposits) for free domestic and international wires
- API access to customize the banking experience
Mercury allows different layers of access to all its accounts, including bookkeeper access which provides all the information necessary for accounting and posting transactions without having access to the funds.
Opening an account requires no minimum monthly balance or initial deposit. All features are available to new account holders upon registration with the option of upgrading to a Tea Room Account, an option for those that wish to take advantage of the Mercury Treasury portfolios.
Mercury’s banking model includes that most account transactions are entirely free, so start-ups can focus on building their business. This no-fee model translates to a physical Mastercard debit card for every user, allowing access to withdraw cash from the Allpoint network of ATMs with no additional transaction fees.
Virtual cards are available as an alternative and are created, as necessary, by the account administrator for online services.
Information about their offered services may seem sparse on their website, but they offer an extensive FAQ about their company and available options.
Part of Mercury’s business model was born from its focus on a specific customer niche and partnership with Evolve Trust & Bank. This focus extends to who may open an account with them. Mercury doesn’t support sole proprietors or trusts, and their services are limited to companies formed and registered in the U.S.
Unlike its competitors, Mercury Bank doesn’t support cash deposits and has services focused on digital transactions.
Although check deposits are supported and an alternative to cash deposits, they must be enabled on a case-by-case basis by Mercury. They will only be available for accounts with an established funding and transaction history on their account.
Mercury is not the type of bank to leave your savings in if you hope to grow it without investment. The savings accounts offer a low interest rate of return, and businesses are better off upgrading to the Tea Room account and using the Mercury Treasury program to invest their additional savings.
Also, per Federal Reserve regulation established after the 2008 economic crisis, only six transfers can be made out from the savings account, further limiting money movement.
Every Mercury Bank account is FDIC regulated and insured for up to $250,000 with up to 14 sub-accounts included. As Mercury Bank is not a bank itself, Evolve Bank & Trust provides banking services in partnership, with all the usual federal protections on funds and investments offered by a modern bank.
Each of these 14 sub-accounts acts as a separate entity with virtual cards associated with them. The company can create these sub-accounts for team members with custom names and access while keeping them under the same digital banking “roof.”
Mercury Bank reviews its security measures multiple times a year, including hiring a third party to test for vulnerabilities.
Other notable security measures include:
- Never storing debit card numbers
- HTTPS communication and HTTP Strict Transport Security (HSTS) policies to protect against attacks
- Time-based one-time-use passwords for two-factor authentication with Google authenticator or other authenticator apps
- Never using SMS text messages to communicate authentication codes
Securely Linking Accounts
Plaid, a product used by companies like Venmo and American Express to connect other financial accounts to apps, is used by Mercury to link their digital bank account to other digital or mobile accounts held by financial institutions.
This linking of accounts can save time and allows businesses to access all the financial reports at once, with Mercury acting like a central hub. Complete transactions quickly without needing to change applications.
How to Open a Mercury Bank Account
Registering for an account is as easy as visiting the website, filling out some basic information about yourself and your U.S. company, then providing the necessary documentation. It’s important to note that while the business must be U.S. based, the person applying does not need to be physically in the United States, with some countries restricted from registering.
For documentation, Mercury Bank requires your company’s federal employer identification number (EIN), the company’s official formation documents, and a picture of government I.D. like a passport or U.S. driver’s license. Mercury Bank encrypts this information with all the other financial information.
After the account is approved and opened, you can fund the account and begin customizing and creating sub-accounts for team members.
Who is Eligible for an Account?
Geared towards tech companies and start-ups, Mercury Bank focuses on businesses that don’t use physical cash.
However, any U.S. company that meets its criteria can open an account provided they don’t require cash to be deposited and can make do with checks needing to be enabled on a case by case basis with a history of funding and transactions.
Companies that rely on digital transactions will get the most out of the Mercury Bank account.
Business prohibited from applying for an account are those situated in one of the restricted industries:
- Money services business
- Adult entertainment
- Internet gambling.
Currently, Mercury Bank is unable to provide services for sole proprietors or trusts.
Check out this video on how to open a Mercury bank account for foreigners:
Mercury Bank Features
Compared to a digital or mobile bank that offers general services, Mercury Bank favors tech companies or companies that rarely handle cash and businesses looking for funding. They provide tools that link with payment processors and offer read-write application access to customize their banking experience with their start-up further.
Upon review, Mercury Bank’s features do seem to focus strongly on helping start-ups scale and grow. The standard free account offers plenty of features on its own and requires no monthly minimum. Free daily transactions, $5 and $20 domestic and international wires, respectively, and no monthly fees allow businesses to keep their money in their accounts.
However, for accounts that hold a balance of $250,000 or more, there is the option to upgrade from standard to the Mercury Tea Room account.
The Mercury Tea Room account allows access to the Mercury Treasury dashboard and program, free domestic and international wire transfers, and Mercury partner perks. Mercury Bank also sends complimentary tea to all its Mercury Tea Room accounts to live up to its Tea Room name.
With the Mercury Tea Room account, businesses can partake in the Mercury Treasury, an automated cash management account with an interactive dashboard where extra money is set aside into a mixed portfolio of government securities and money market funds while remaining highly liquid.
This portfolio is customized based on Mercury’s information and uses information like the business’s cash flow to set up the mix of securities and bonds.
At the time of writing, the portfolios aim to return up to 0.07% annually, and all Treasury accounts have $500,000 SIPC insurance.
In addition to the one-time movement of funds into the Treasury account, the business can also choose to set up an automated deposit of extra cash, so money moves from the much lower-yielding checking to a higher-yielding investment vehicle without any intervention necessary.
This feature, which is only available to Mercury Tea Room account holders, requires minimal effort, no minimum deposit, and has no additional fees for using the service. However, Mercury Bank takes a small amount of the return as payment, one of the few ways the company makes revenue from their services due to their no fee structure.
After signing up for an account, each account user has a physical Mastercard issued, provided they are in the United States. The card usually arrives within 8-10 business days. Mercury can only mail cards within the U.S., so users located outside of the U.S. must use a mail-forwarding service.
These Mastercard debit cards can be used without international transaction fees and connected with iOS digital wallets so that businesses can use them with Apple Pay.
Mercury Bank account holders can link their accounts to some of the most popular payment processors such as Amazon, Stripe, Paypal, and more to assist with eCommerce. With this feature and the ability to integrate popular software like Quickbooks, your Mercury account can track the entire lifecycle of payment from customer purchase to the posted transaction.
With the inability to make cash deposits and check depositing not available to all businesses, Mercury prioritizes getting the most out of digital transactions.
Making it even easier to track transactions, this digital bank offers many features for little to no expense. They have built-in, easy-to-use tools that allow you to make and receive payments, complete transactions successfully, and issue refunds for your online store or within your company.
In our opinion, Mercury makes moving money fairly straightforward with easy-to-use flows and controls.
With wire transfers being one of the few transactions that require a fee to use, ACH (electronic transfers) are a free alternative Mercury Bank offers and are available in the same send money flow as other methods of sending money from your account. ACHs allow for money movement between banks without using cash or checks and support both credits and direct debits.
API Account Access
All Mercury Bank accounts have read-write access to its API, which means developer access to its banking software and the ability to automate as you see fit. This access offers a layer of customization that is above and beyond most digital banks.
What does this mean for the start-up or tech business that signs up with Mercury Bank? For a savvy company and able to work with API documentation, the sky’s almost the limit.
API access means the ability to create custom dashboards based on your financial data and ensure the critical information is upfront and easily accessible.
The integrated ability to make sweep rules allows for automatic transfers, performing mass payments, and automating and reconciling transactions with software. Up to 100 automatic ACH payments are permitted under custom API rules; the business can request more than 100 from Mercury.
As no two start-ups are the same, Mercury Bank tries to allow each start-up to bank differently as well.
In addition to the physical Mastercard debit card issued to each user upon account creation, up to 50 virtual cards can be created with a few clicks. These virtual cards can be used for all the same things as the physical Mastercard wherever virtual cards are accepted. They can be associated with a digital wallet and set up for automated payments for ease of use.
With its unique series of numbers for online transactions, account holders can link each assigned virtual card to a specific event or person within the team and the associated sub-account. From start to finish, the process only takes a minute or two.
Virtual cards require little upkeep and are easy to use. They can be frozen or unfrozen if necessary from the web interface anywhere in the world.
Just like the user accounts, which can be easily customized and subdivided when necessary, virtual cards can be tailored to your needs, allowing a team member to pay for things the start-up requires, like Facebook ads, without requiring direct access to the account.
The card controls remain with the account administrator, and features include cards having daily limits. Administrators can change these daily limits and also have the ability to cancel the card altogether. Virtual cards are becoming a popular alternative.
Part of Mercury Bank’s exciting quality is its focus on its primary customer niche of start-ups and tech businesses and offerings above just being a service provider. One of the ways Mercury gives to the community is a program they offer to qualifying businesses for no additional charge, called Mercury Raise.
Mercury opens applications every few months, and the program looks to “raise” start-ups who are funding pre-seed and seed rounds of less than 5 million.
Within the information used for this Mercury Bank review, the company references being part of this community multiple times, providing banking services, and helping the user grow and scale.
Start-ups that wish to be part of the program must fill out a questionnaire to apply for one of 50 spots.
Mercury chooses fifty companies, and then each is given their chance to pitch for seed funding in front of a Raise mentor from some of the biggest companies in Silicon Valley. After feedback, their information is entered into a private database for the investor’s network to discuss further.
After pitching, mentors give one-on-one feedback to the companies, and 170+ investors in the Raise Network are given their pitches for further discussion.
While the program guarantees no investment, it does give smaller start-ups the chance to be seen in front of a wide variety of investors from several different industries. Mercury Raise will then make personal introductions if any of the investors are interested or wish to know more or if they want to participate in seeding the business.
Future Features in 2021
Mercury Bank also runs a regularly updated blog and podcast that provides new information and news focused on investing, start-ups, and the entrepreneurship industry alongside banking services.
Mercury regularly posts future features, and for 2021, they include:
- Two-factor authentication and activity logs to strengthen security
- Expanding API access for automating payments, automatic reconciliation, and to power the admin dashboard
- Webhooks and the ability to track transactions, balance changes, and logs
- Searchable transactions
- Company analytics and seeing money made and spent in real-time
- Upgraded customization for user permissions
- Further integration with finance applications like Gusto, Stripe, Quickbook, and more.
The Bottom Line
Besides the banking tools, Mercury Bank has gone beyond and started a community for start-ups offering information and opportunities for beginning businesses.
If your business fits with their customer niche and you’re looking for a low-cost alternative to traditional digital or mobile banking, Mercury Bank may be the platform for you.
Tommy Gallagher is an ex-investment banker and founder of TopMobileBanks.
He is an early participant in banking digital transformation and fintech development. His consulting clients include prominent startups in the US and Europe.
Here on topmobilebanks.com, he is covering macro trends in the digital banking industry.