Why Startups Choose Mercury for Banking

Alice Ko, CPA, CA

When it comes to banking, startups have unique needs that traditional banks may not address.

In light of a recent banking crisis with Silicon Valley Bank, First Republic Bank, and the uncertainty surrounding interest rates, choosing the appropriate banking partner has become increasingly crucial.

That's why more and more startup founders and operators are choosing their banking partners carefully.

As a part of our Fintech Tools for Founders series, today, we want to talk about Mercury and why startups select Mercury as their preferred banking partner*.

In this guide, you'll learn why:

✅ What sets Mercury apart from traditional financial institutions

✅ How Mercury caters specifically to the needs of startups

✅ What accounting solution works best with Mercury

What factors should I consider when selecting a bank for my startup?

When startups are choosing a bank, there are several factors to take into consideration. Like Kurtis Hanni states, "banks are much more than choosing where your money sits."

Convenience is an important factor for entrepreneurs when choosing a bank, particularly since 70% of startups are now remote. Startups should look for banks that offer convenient online banking platforms and digital solutions. This allows startups to easily access their accounts, make transactions, and manage their finances from anywhere, at any time. Speed is often underestimated as an important factor to consider when choosing a banking partner. For startups that operate at a fast pace, remember that collaborating with a slow bank could become a problem

Competitive interest rates and minimal fees are crucial for companies with limited financial resources that must pay extra special attention to burn and runway. Startups should also seek to minimize expenses and maximize savings, so finding a bank that offers favorable rates and low fees is a priority.

Startup expertise is a key factor that startups should prioritize. They need a bank that can cater to their unique financial needs, understand their challenges, and offer customized solutions. If you are a software startup, banking with a financial institution that primarily serves manufacturers could be frustrating. They may not fully comprehend your specific requirements. This can even make tasks such as approvals and transaction limits more challenging. The right type of customer service and support is also essential. Look for a bank that provides responsive and helpful customer service, and even those who may offer additional support and resources to help grow your startup.

By considering these factors, startups can make an informed decision when choosing a bank that aligns with their needs and goals. It's essential for startups to find a banking partner (like Mercury that not only meets their current requirements but also supports their long-term growth as they scale.

Why Startups choose Mercury

More and more startup founders are drawn to opening up a business Mercury account for many reasons. Mercury is very similar to dealing with a conventional financial institution, as the entire experience revolves around your bank account, which serves as the ultimate source of truth for your company's finances. And the good news? Mercury maintains the positive aspects of traditional banking while eliminating the negative ones.

Here are a few reasons why startups choose Mercury.

✅ Competitive rates and fees

The biggest difference between Mercury and mainstream banks are the fees. Mercury does not charge anything for holding a checking or savings account. That's right - opening an account with Mercury is completely free. 

No monthly fees. No transaction fees. No minimum deposits. No transfer fees. No minimum balances are required. 

Outside of foreign currency conversion fees, everything, including monthly fees and overdraft fees, is $0. Say goodbye to excessive monthly fees, debit card fees, and ATM fees commonly associated with traditional banks.

It goes without saying that this cost-effective option would be very appealing to startups. By saving on banking fees, companies are able to allocate more resources toward growth and product development. 

✅ Ease of use

Another standout benefit is the ease of account setup and management. Mercury provides a seamless onboarding process, ensuring that startups can quickly get their banking needs up and running without jumping through hoops or loads of paperwork (usually takes 5 to 7 days). A founder just needs formation documents and an Employer Identification Number (EIN) to open a Mercury account.

✅ Remote-first presence

Mercury has a digital-first presence (versus traditional banks that may have a physical-first presence). This is an important aspect for startup founders who also run their companies remotely or who have distributed teams. Since Mercury is remote-first, their user experience and customer support is built to be optimized for those looking for a digital-only experience. Startups can also access their accounts and perform various financial transactions entirely remotely, and don't need to worry about being at a location in person to manage their cash flow.

✅ Range of banking products

Startups can open checkings accounts (FDIC-insured), savings accounts, business checking accounts with virtual and physical debit cards, Mercury Treasury accounts, and even access venture debt financing. Sending funds via ACH (electronic transfer) is also an option. Moreover, Mercury works with partner banks — Evolve Bank and Choice Financial Group — to ensure startups have access to a network of financial services tailored to their needs. Other products include:

Mercury Vault, uses allows customers to move uninsured deposits across a network of FDIC-insured banks. This helps customers get up up to $5M in FDIC insurance through Mercury's partner banks and sweep networks

Mercury Treasury is an automated cash management account that provides customers with the ability to invest surplus funds into lower risk, highly liquid mutual funds, which ensure that money is also earning a return rather than sitting in a low- or no-interest account. This product is only available to customers with cash balances that exceed their FDIC insurance limits. As of August 9, 2023, the rate is up to 5.42% annually with a $250,000 minimum deposit.**

Mercury Venture Debt is a type of founder-friendly financing that allows venture-backed startups to extend their runway without losing equity.

Mercury IO Mastercard is a credit card that account holders can open without a credit check or annual fees. It also offers 1.5% cashback*** on all purchases, which is automatically deposited into your Mercury account. Plus, founders can also issue virtual employee corporate cards to help team members access what they need, without slowing the process down. 

✅ Features for smarter expense management

Low fees and flexible account options are essential when startups are looking to optimize their finances and expenses--and Mercury understands this deeply. Their comprehensive suite of features are designed to allow startups to efficiently manage their expenses, track cash flow, and transfer funds between accounts, if needed. Features like automated bill pay, card controls with customized spend limits, and custom account permissions are all powerful advantages that allow teams to establish better spending habits and expense management across the company. This helps founders make informed decisions about spending, which is important when they need to pay extra attention to burn and runway.

✅ Specialized startup-specific services

Mercury provides access to funding options and a startup’s financing needs such as providing venture capital connections - this isn’t a service that traditional banks offer. Startups require capital to fuel their operations and growth. Mercury understands this and provides valuable resources and networking opportunities – such as Mercury’s investor database and community offerings — that can help companies access the necessary funds and connect with potential investors. This support can make a significant difference in the success of a startup.

Mercury offers direct API integrations with popular accounting and startup tools. These deep API integrations in the modern founder’s financial stack ensures smooth flows across the entire process. Direct integration allows startups to streamline their financial operations by easily syncing Mercury accounts with other tools, including startup accounting software, like Puzzle. To do this, Mercury offers a developer-friendly API, allowing Puzzle to integrate Mercury's banking services into Puzzle's platform.

✅ Security

Last but not least, it's also important to note that Mercury's focus on security and compliance also ensures startups can confidently handle their finances without worrying about data breaches or regulatory issues.

Is a Mercury account the best option for me?

If you are a high-growth startup looking for a low-cost banking option that does not require you to open an account in person, Mercury is a good option for you. It's important to note that Mercury is not available for sole proprietors and does not accept cash deposits. So, if you anticipate that your business will have a lot of cash deposits, it's best to look for an alternative solution. If you need advice on how to assess other bank, we recommend assessing the financial health of your bank.

What are the best API integrations to use with Mercury?

Puzzle, Stripe, Gusto, and Firstbase are some of the popular integrations on Mercury. Mercury's API access gives developers access to their software—an especially valuable feature for other companies that want to integrate with Mercury like other startups or fintech-focused companies

Mercury’s API is also valuable for accounting and finance teams because accountants and CFOs no longer need to customize or create their own dashboards when the API is used correctly. 

What are the best Mercury accounting integrations?

Puzzle is a modern, real-time Autonomous Accounting software for startups. In fact, Puzzle is the only accounting software that is built directly native to Mercury's API while other accounting systems have a plug-in. This makes bank reconciliations, month-end close, and financial reporting preparation significantly more efficient for accountants. Here’s how: 

How Mercury’s API leads to greater efficiencies in Puzzle

🧩 Faster categorization with 90% auto-categorization

When a startup is building financial reports for the first time, the first step is downloading all the bank transactions from the bank. This involves logging into a bank account, downloading the bank statement (or if you are lucky, downloading the csv file), and then importing this statement into your accounting system. Sounds like a work? It is! And worst of all, banks fees are notorious for breaking and disconnecting. 

This process may be further complicated by the need to clean the data file before import, which always requires time. 

The Mercury API streamlines this traditional time-consuming task of importing PDF bank statements into Puzzle by automating everything and eliminating the need for manual downloads. 90% of banking transactions are auto-categorized in Puzzle through direct integration with Mercury. 10% of these are intentionally not auto-categorized as Puzzle recognizes the need to manually review certain vendors whose transactions may be more subjective. In Puzzle’s data, we found that traditional bank feeds (not Mercury) that are connected via Plaid are not as powerful as Mercury's as there is limited metadata.

Rather, every single bank transaction in Mercury is immediately synced to Puzzle in real-time with the Mercury API. Because Puzzle is built native to Mercury, the risk of bank feed breakage is lower than traditional financial institutions.

The combination of Mercury's API and PuzzleBot ensures that all banking transactions are categorized much faster in Puzzle over other accounting systems, thereby creating an efficient machine. This enables users to access insights much faster than in other accounting systems.

🧩 Faster reconciliations

Reconciliation involves matching transactions in an accounting system with those in the bank. This process ensures all transactions are fully accounted for. For those who have been through it, reconciliations are quite manual and time intensive as accounting systems and banking systems and accounting systems don't traditionally "talk" to each other. With the Puzzle-Mercury API integration, this process is immediately simplified. Unlike QuickBooks Online, Puzzle runs automated pre-reconciliation validation checks before you run your Mercury reconciliation.

How Mercury’s API leads to greater accuracy

🧩 Full traceability

The Mercury API can also automate the import of memo information from every single bank transaction. This includes meta-data including transaction descriptions and notes. By automatically importing this data, the API can help ensure that all relevant information is recorded into Puzzle. This full data sync saves time, reduces errors, and also provides an audit log of sorts, as there is no need for manual data entry or lengthy email confirmations about what a transaction was for.

How Mercury’s API leads to timelier insights and better decision making

🧩 Real-time startup metrics

The Mercury-Puzzle integration ensures that data is synced faster and with more accuracy. This enables speedier and better decision-making for business owners as they no longer have to wait for the data to be pushed through the system to make crucial business decisions. Typically, manual bank imports, manual reconciliations, and manual categorization require a significant amount of time to complete. With Puzzle's AI-powered Autonomous Accounting workflows, this can be done faster than ever before. This means founders and stakeholders don't need to wait 2 to 3 weeks for essential financial reports to make decisions. Rather, they can access insights immediately! Puzzle's dashboard gives startups the ability to access standard financial reports like the balance sheet, income statement, and cash activity report, as well as crucial startup metrics like burn, runway, cash, MRR, and ARR. And at a startup, time is money!

🧩 Real-time spending insights

At a startup, burn is monitored closely. And sometimes, decisions about spend and burn need to made instantly. Waiting 2-3 weeks for data could mean the difference between life and death for a startup. Because Mercury's API is able to sync financial data instantly into Puzzle, this means crucial spend insights can also be monitored, thereby ensuring crucial decisions about burn are made with up-to-date data.

What other Mercury API integrations exist?

  • Stripe: Startups can view their Mercury banking balances right from their Stripe Dashboard.
  • Zapier: Zapier also offers a lot of integration options for Google Sheets, SMS Messages, Slack, Airtable, and more.

Startups choose Mercury for startup expertise, ease of use, and seamless accounting integrations with Puzzle

Banking for startups can be challenging due to unique needs and requirements that startup founders have. When assessing the best bank for your startup, industry expertise, convenience, and competitive rates and fees should be considered–and that’s what makes Mercury an ideal banking partner for startups. 

Take advantage of the Puzzle-Mercury API integration and stop dealing with broken bank feeds while accessing instant startup metrics and hassle-free accounting. 

Stay tuned for more guides in our Fintech Tools for Founders series!

*Mercury is a financial technology company, not a bank. Banking services provided by Choice Financial Group and Evolve Bank & Trust®; Members FDIC.

**Mercury Treasury is offered by Mercury Advisory, LLC, an SEC-registered investment adviser. Registration with the SEC does not imply a certain level of skill or training. SEC registration does not mean the SEC has approved of the services of the investment adviser. This communication does not constitute an offer to sell or the solicitation of any offer to purchase an interest in any of the Mercury Advisory, LLC investments or accounts described herein. No representation is made that any investment will or is likely to achieve its objectives or that any investor will or is likely to achieve results comparable to those shown. Past performance is not indicative, and is no guarantee, of future results. Mercury Treasury is not insured by the FDIC. Mercury Treasury are not deposits or other obligations of Choice Financial Group or Evolve Bank & Trust, and are not guaranteed by Choice Financial Group or Evolve Bank & Trust. Mercury Treasury products are subject to investment risks, including possible loss of the principal invested. Some of the data contained in this message was obtained from sources believed to be accurate but has not been independently verified. Please see full disclosures at mercury.com/treasury.

***The IO Card is issued by Patriot Bank, Member FDIC, pursuant to a license from Mastercard. To receive cash back, your Mercury accounts must be open and in good standing, meaning they cannot be suspended, restricted, past due, or otherwise in default.

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Alice Ko, CPA, CA

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