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What’s the best bank for eCommerce companies?
Mercury vs Novo vs Bluevine vs Brex vs Chase Business vs Axos
Founded by Immad Akhund in 2019, Mercury aims to cut the red tape and clunky rules and processes at legacy banks. Its Founder was frustrated with the existing banking options when running his startup Heyzap (acquired in 2016 for $45M). They’ve built a digital-first bank that caters to the needs of startups and small businesses. While they aren’t technically a bank (they partner with established banks), Mercury has everything that an eCommerce startup needs to run effectively. It’s quick and easy to apply. It wont nickel and dime you on fees - its core banking products are all free. Its dashboards are clean and modern. And it has great integrations with our recommended accounting tools. With Mercury, “things just work” as one founder said. It’s become the go-to bank for startups. Over 40% of the most recent YC batch bank with Mercury.
Mercury is built from the ground up for startups. Its core banking products work flawlessly, and they wont nickel and dime you on fees. Its free to use.
Use our referral link and get a $250 sign up bonus when you deposit $10,000 into your account.
We did a month of research for this guide. We spent hours researching each of the competitors, and we went DEEP on the Reddit reviews. We scoured the Twitterverse for thoughts (positive and negative). We also talked to eCommerce founders using the products, and the result is this guide.
When do you need a business bank account?
We recommend setting up a business bank account as soon as possible. Once you are serious about launching your business, we think you should set up an LLC and get a business bank account immediately.
Why do you need a business bank / bank account?
A bank account is on our Bare Bones™ list of tech tools that every startup needs. It’s the backbone of your finance department. Having a separate bank account for your startup has tons of benefits. It keeps your personal money separate from your business cash, which is helpful for keeping track of spending and doing taxes right. Tax season will be much easier with a business bank account. It also centralizes your finances, so you can see how much money is coming in and where it's going out. Accounting will be made much easier with a business bank account. If you've got a team, it makes paying them and keeping things legal way smoother. Investors and lenders usually require you to have a business account too. Plus, it makes planning and budgeting easier.
Need we say more? Plus, our recommended bank has no annual fees (it’s free).
What do you need to get a Mercury Bank account?
In order to get a Mercury Bank account, you need to have a U.S. company with a federal employer identification number (EIN). This means you must first register your business (e.g., create an LLC - Doola is our recommended tool for this).
Most eCommerce businesses will be accepted, but you’ll need to find an alternative if your business involves marijuana, adult entertainment, or gambling. Additionally, if you’re structured as a sole proprietorship, unfortunately, Mercury wont work for you.
To apply, you’ll need to have your EIN, business formation docs (e.g., certificate of formation), a government issued ID, and your Social Security number. You’ll also need info for any co-founders or owners with more than a 25% ownership stake in your company.
You don’t need to be physically based in the U.S. to apply, but you will need a physical address in the U.S., as well as some type of existing or planned operations in the U.S.
Unfortunately, if you’re a founder living in one of the following countries, you can’t open an account: Belarus, Burundi, Central African Republic, Congo, Democratic Republic of the Congo, Cuba, Iran, Iraq, North Korea, Lebanon, Liberia, Libya, Nicaragua, Pakistan, Russia, Somalia, South Sudan, Sudan, Syria, Venezuela, Yemen, and Zimbabwe.
It typically takes 1-2 business days to get approved for a Mercury bank account. It took one day for our business to be approved. We applied on a Thursday and were approved on a Friday.
Once you’re approved, you can fund your account, send payments, and integrate with other parts of your tech stack (e.g., accounting (Xero or QBO) and Slack). You can generate virtual cards immediately, and you’ll receive your physical business debit card in 8-10 days (if you want one).
Mercury says they are geared towards tech startups, but in our experience, they work great for eCommerce companies.
What we like about Mercury:
Fast and easy application & approval process
Mercury’s application process is entirely online and very easy. They advertise a 10-minute application process. It took us about 30 minutes, but we’re slow, and had to hunt down our articles of incorporation. Applications are typically approved in 1-2 business days (it took our business 2 days for approval). Getting your bank account up and running should be easy, and it is with Mercury. Get your bank account quickly and focus on the other things that will actually make your business better - product and marketing.
Unlike other banks, Mercury won’t nickel and dime you with fees. The core product - it’s online banking platform - has no monthly fees and no transaction fees. This is huge. Additionally, there is no minimum opening deposit requirement and no minimum balance requirement. You can withdraw cash through the Allpoint ATM network, and there are no fees for out-of-network ATMs (although they won't reimburse fees those ATMs might charge). Additionally, Mercury has no overdraft fees, and it doesn’t charge to send or receive checks. It also offers free domestic and international wire transfers (although a 1% currency exchange fee will be applied to non-USD transfers). Free international transfers make it easy to pay overseas merchants and will save you a ton of money.
Banking Nuts & Bolts
Mercury is great at the nuts and bolts of banking - sending and receiving money, tracking transactions, monitoring spending etc. Its dashboard is clean and easy to use, and they have a banking app (that actually works) for when you’re away from your computer. Adding users is straightforward and you can add as many as you need. Paying vendors and employees can be done through ACH, wires, checks, and foreign exchange (all without fees). It offers two access levels to permission users: one for full access (sending and receiving payments), and one for bookkeepers with view only access to transaction histories and statements. They also offer credit and debit cards that are easy to issue to employees with set spending limits, and they also make it easy to create virtual debit and credit cards. The Mercury Credit card offers 1.5% cash back, but we recommend using the Capital One Spark Cash Plus card offering 2% cash back (read our guide on business credit cards).
High FDIC insurance amounts
With the collapse of Silicon Valley bank, FDIC insurance should be top of mind for all startups including those in eCommerce. While Mercury isn’t a G-SIB, and it isn’t even technically a bank, it uses a cash sweep program with partner banks to distribute deposits among its partner banks, so that deposits of up to $5M are FDIC insured. This is the highest FDIC insurance amount of any bank we reviewed. Typical FDIC insurance tops out at $250k. Sleep easier at night knowing that your cash is secured by FDIC insurance.
Mercury has great integrations with our recommended accounting tools (Xero and Quickbooks) that make the bank reconciliation process easier. In addition to their accounting integrations, Mercury has seamless integrations with eCommerce payment processors like Shopify, Amazon, Paypal, Stripe, and Venmo. It also has a NetSuite integration for those that use it. It’s also easy to integrate with external bank accounts with Plaid. In addition, Mercury has an API with read-write access so that you can integrate with more tools and easily create internal dashboards and automations.
While Mercury offers low interest rates on savings accounts (see ‘what we don’t like’ below), Mercury offers a Treasury product with much higher interest rates. The Treasury Product works by putting your idle cash in short term U.S. government backed securities. For amounts from $500k to $2M you will earn 4.97% Net Yield as of this writing. The yield is net of a 0.5% fee Mercury charges for the treasury product (one of the only fees they charge). You need to have at least $500,000 to qualify for the treasury product, so the bar is not low, but for those that qualify, it’s a great feature.
What we don’t like about Mercury:
Low savings interest rate
Mercury’s savings account offers a measly 0.001% APR on your cash in the savings account. If you have over $500k, you can use their treasury product and earn much better interest, but for those below that you are stuck at the low rate. However, if you have less than $500k in your business bank account, we don’t think it's worth it to try to optimize for more basis points of savings account interest. The national average for savings account interest is only 0.37% according to the FDIC.
Some customers have complained of the limited live support with Mercury. Since Mercury is an online-first company you won't have a local bank branch that you can stop in to chat with a banker. To get help, Mercury offers live phone support from 6a to 5:30p PST from Monday to Friday. We’ve also found their email support very responsive, but if you’re looking for a personal connection with your business bank, you might want to look elsewhere. The personal relationship with your local banker might help in securing business financing.
Mercury is free to use. They don’t charge any monthly or annual fees or transaction fees. They make money by earning interest on your deposits. As we mention in the ‘what we don’t like’ section, they have a measly 0.001% interest rate on savings accounts, and they reinvest the deposits in assets that yield more than that and pocket the spread. This is how most banks make money, but others will also charge fees for their services (like money wires). We love that Mercury doesn’t charge those fees.
Brex – Brex offers a banking product along with additional features like spend management (expense reimbursement, corporate card issuance etc.) Similar to Mercury they come with no annual fees. However, Brex has recently pivoted away from servicing SMBs and is now only focused on venture funded startups and mid market companies, so many eCommerce businesses won’t qualify for Brex unless you have raised money from accredited investors. Their FDIC insurance also caps out at $1M vs Mercury’s $5M.
Bluevine – Similar to Mercury, Bluevine offers a product with no monthly fees or minimum opening deposit. They also offer a 2.00% interest rate on Checking Account deposits up to $250k. However, Bluevine’s integrations trail Mercurys (especially their Xero integration), they don’t offer debit cards, and their FDIC insurance limits are lower at $250k.
Novo – Novo is another option that’s similar to Mercury. It’s a digital-first bank that has no monthly fees, no minimum balance requirements, no transaction fees and no incoming wire fees. Novo will charge fees for insufficient funds and uncollected funds returned ($27). Unlike Mercury, Novo does not support international outbound wires and you will instead have to send money internationally through ACH transfers. Novo also lacks a direct integration with QuickBooks, a recurring bill payment feature, and phone support. In addition, Novo’s FDIC insurance limits are lower at $250k.
Axos Business – Axos is another competitor that offers zero monthly fees and fee-free transactions. It stands out from others with its 24/7 live phone support. Its checking account also offers a 1.01% APR on up to $50k in deposits (but much lower on $ above $50k). It trails Mercury in its integrations - it only integrates with Quickbooks and not Xero, Shopify, Amazon etc.
Brick & Mortar
Chase Business – Unlike the online only options above, Chase offers access to physical locations. It offers free electronic transactions and no minimum opening deposit. Chase charges a $15 monthly fee on its business accounts, however, the fee is waived with a $2,000 daily minimum balance. The FDIC insurance limit is lower at $250k, and it lacks the open API of Mercury.
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