Mercury a popular banking partner for the startup world, says it will close the accounts of users in several countries including thirteen African countries by August 22 2024.
“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,” the company said.
With the new prohibitions, African startups incorporated in Delaware cannot open Mercury accounts unless the founders live in the U.S.
The affected African countries:
- Burundi
- Cameroon
- Central African Republic (CAR)
- Democratic Republic of Congo (DRC)
- Congo
- Liberia
- Mali
- Mozambique
- Nigeria
- Somalia
- South Sudan
- Sudan
- Zimbabwe
Founded in 2017, Mercury is a growth-stage US-based fintech that provides banking services to startups worldwide. While not a typical bank, they work with a mix of middlemen (BaaS) and banks directly to offer their services to their customers.
According to reports, the move is a result of Mercury tightening its compliance and regulatory standards, Earlier this year [2024], Mercury was caught up in federal scrutiny through one of its partners, Choice Bank, around the practice of allowing foreign companies to open accounts.
The local banking regulators were ‘concerned’ that Choice ‘had opened Mercury accounts in legally risky countries.’ Officials also reportedly chastised Choice for letting overseas Mercury customers ‘open thousands of accounts using questionable methods to prove they had a presence in the U.S.’
Countries on the Financial Action Task Force (FATF) Grey list such as Nigeria and Burundi are believed to be easy to target due to their lack of compliance with global standards for combating money laundering and terrorism financing.
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This is also coming in the backdrop of greater scrutiny in the U.S. banking sector especially after the collapse of another startup banker, Silicon Valley Bank (SVB), in early 2023.
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That said, Mercury’s services were crucial for African startups allowing them to operate with U.S. dollar accounts, crucial for attracting and handling foreign investment.
Given that the company was already under criticism in Africa after it restricted the accounts of over a dozen tech startups in 2022, many people in the ecosystem are now looking to move to stable alternatives that provide the same services.
After PayPal, Mercury, a Digital Bank, is Now Blocking African Startups https://t.co/laGKM8J9DQ @BankMercury
— BitKE (@BitcoinKE) March 4, 2022
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