US Bank Mercury to close accounts of startups in 13 African countries
TLDR
- San Francisco-based digital bank Mercury to close accounts in 13 African countries by August 22, 2024.
- African startups in Delaware affected as founders must reside in the US to open Mercury accounts.
- New restrictions to impact users in 37 countries, affecting account eligibility criteria for businesses in certain locations.
Mercury, a San Francisco-based digital bank, which became a key banking partner for African startups following the collapse of Silicon Valley Bank in March 2023, has announced it will close the accounts of users in 13 African countries by August 22, 2024.
Per official emails from Mercury, "Due to recent changes in how we determine account eligibility, we are no longer able to support accounts for businesses with associated addresses located in these countries."
As a result of these new prohibitions, African startups incorporated in Delaware will no longer be able to open Mercury accounts unless the founders reside in the US. The new restrictions will impact users in a total of 37 countries.
Points clés à retenir
Many African startups are incorporated in the US to gain easier access to funding. Financial institutions like Mercury enable these startups to open a US bank account even without being physically present in the US. Industry analysts have noted that for African startups receiving capital from US investors, it is more convenient to keep the capital in dollars in the US, bringing only the necessary amounts to their home countries for operational needs. This arrangement also simplifies paying foreign workers directly from the US. Before its collapse last year, Silicon Valley Bank (SVB) was the primary bank for many African startups. Following SVB's collapse, many of these startups moved to alternatives, including Mercury.
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