Mercury Bank, a San Francisco based digital bank that touts itself to be the bank for startups, has restricted the accounts of startups linked to the African continent, with the CEO, Immad Akhund, stating that the restriction was due to ‘unusual activity’.
According to multiple reports, the firm neither gave any prior notice before taking this action nor did it explain why the action was taken in its first email to the affected startups.
The first email read, “Hi, your access to the Mercury account for [company’s name] has been temporarily restricted. Let us know if you have any question or concerns.”
What Mercury is saying
Mercury told some of the affected startups that their accounts had been flagged and placed under review by its compliance team. Immad Akhund, the CEO of the firm, stated in an email to its clients that the restrictions were due to some “unusual activity.” He stated;
- “I am the CEO of Mercury. Since many of you have emailed/messaged me directly I thought it would be best if I just reached out directly.
- “We found out yesterday that our partner bank noticed unusual activity and asked us to lock and investigate a large set of accounts with linked activity. We are working through our due diligence on all those accounts and will be in touch with you individually with questions if we have any on your account or activity.”
- He further stated, “Since it’s a reasonably large set of accounts it’s taking us some time to work through all of them but it’s the highest priority for us internally and we have more than 10 people working on this. We apologize for this sudden inconvenience and hope to put better practices in place to avoid this in the future.”
How social media is reacting
Modupe Odele, popularly known by her Twitter handle, ‘Mochievous’ and the founder of ScaleMyHustle and Vazi Legal, took to Twitter to condemn the action taken by Mercury. She stated, “This is not a good look. I have a list of over 20+ African startups whose bank accounts were mass-blocked at around the same time by @BankMercury yesterday. I love Mercury a lot but they can’t just do this to an entire continent. It is not right & we need to all speak up.”
She further stated in a reply to Odunayo Eweniyi, the co-founder and COO of Piggy Bank that, “’unusual’ and “linked activity”. LOL. We have people in Ghana, Kenya, Sierra Leone with their accounts locked all about the same time. there’s clearly only one thing that connects all of them.”
Iyinoluwa Aboyeji, the co-founder of Andela and the former managing director of Flutterwave took to Twitter and stated, “I hope the general restrictions placed on African startups by @BankMercury reminds everyone that there is no alternative to building our own. Let’s build a Nigerian International Finance Centre and buy offshore bank licenses so we can bank our $$.”
In another email to clients by the bank, it did not give a timeline as to when the checks on the accounts will be completed but promised to give an update as soon as it is done. It further stated, “We’re prioritizing the review of your account with our bank partner. We do apologize for any inconvenience this may cause.”
What you should know about Mercury
- Mercury, which is a San Francisco, California based bank that touts to have over 4 billion in customer deposits from 40,000+ businesses in over 200 countries, was launched in 2019.
- In 2021, the firm was able to raise $120 million in a Series B funding round led by investment firm, Coatue. This puts the bank’s valuation at $1.6 billion.