Physical address issues with Mercury Bank

Remote Businesses
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In recent months, and especially after the Corporate Transparency Act became effective on January 1, 2024, banks have been auditing the physical addresses on file with their customers’ bank accounts.

Mercury is one bank that we have seen causing ripples in the international community. The bank used to be one of the favorites for internationals when it comes to opening business bank accounts. However, after they switched to a new underwriting bank last year, it is now significantly more difficult to open a business bank account there.

Furthermore, in recent months, Mercury has also been going back and auditing all the addresses for their customers. Many customers are now getting requests to provide proof of physical address for Mercury bank.

What do you do if you are getting asked by Mercury to provide such documents?

Note that all the information and recommendations below is all for Mercury bank specifically. Other banks have their own underwriting criteria and have their own restrictions.

Our first recommendation is to follow what Mercury allows you to do. Here’s a sample email that Mercury sends out to customers:

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Based on the email, you can use your international home address to satisfy your physical address requirement. U.S. based address is not required. It will depend on whether your country is accepted by Mercury in this case.

Our second recommendation, which is not really a solution but more of an advice, is to NOT work with Mercury moving forward. I know that Mercury is very popular for internationals because they used to be less strict than other banks. But that’s no longer the case here and in fact, they are MORE restrictive than other banks at this time. I would recommend that you start looking at other banks and options.

You can try other fintech banks like Relay, but it’s my experience that fintechs generally are not the best choices to go with simply because they use an underwriting bank that may have different objectives from the fintechs’ own interests. Underwriting banks for fintechs are normally more restrictive these days than traditional banks. If you were to go with traditional banks, you will likely have fewer issues in the future even if they are strict at the beginning.

What you might want to do now or in the near future
If you’re international and you have a stable business, I would highly recommend that you have at least 2 bank accounts. In case one decides to flag you or close your account, your business won’t be affected since you can switch to the other bank while you resolve the issue with the problematic bank or look for a new bank.

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I happen to come across an interesting news article that relates to Mercury and also why they switched their underwriting bank.

Based on this article, it is likely that opening bank accounts with fintechs will get harder over time. Therefore, I think it’s a smart move to consider working direct with banks instead of fintechs. They will be more stable and you certainly do not want your money to be tied up in a fintech bank account if they go bankrupt. Even if FDIC is able to insure up to a certain amount, the disruption to your business is still going to be great.

If fintech is still on your radar, then I would suggest opening up multiple bank accounts to diversify your risk. Fintechs simply do not have the financial strength that large institutional banks have to weather any shifts in the economic and competitive landscape.

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If you specifically want to work with Mercury, they do offer options when it comes to physical address requirements. Mercury does NOT require your physical address to be in the U.S. They give you the option to use an international address. They are looking for the address that can either be a physical office or location where you do most of your work. International addresses are accepted (unless it’s in a country that is not allowed). You should then be able to use a normal mailbox address for the mailing address in the U.S and it is best that you talk to Mercury and ask them about this option.

Separately, it’s recommend that you setup an extra account with another bank. Banks have the power to suspend and close your account for whatever reason. If you have a business that is bringing in sales and need cashflow to run your daily operations, then it’s best to have another bank account as backup so you are not caught off-guard and need to scramble to deal with cashflow problems.

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For those wondering, I want to add that Wise also rejects the VPM TruLease address - on the basis that it’s a “PO box”.

I don’t know if it’s because the addresses VPM uses are oversold, or because the lease VPM provides lists VPM as the service provider. (Why is this the case?).

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@probiz Welcome to our forum.

Aside from all the info posted above, I do want to add that fintechs have become particularly challenging for internationals since the beginning of 2024. Specifically, if you provide a non-U.S. passport, you are automatically assumed to NOT be living in the U.S. so you have a much larger hurdle to overcome.

Fintechs, and many other financial institutions, don’t just look at whether you have an office or not. They will look at whether it’s credible for you to be doing your “day to day” work at your home or office. So it’s no longer a case of “I have an office”, but that you have to show “I have an office and I am performing work here.”

Normally, this will require you to show some sort of physical use of the office. Installing a utility service under your name is generally one way to show this. For that reason, a lease agreement is usually no longer sufficient these days.

In regards to rejection reasons, Fintechs like to lump all the different reasons for rejecting you due to an address under one general category of “PO Box”. This doesn’t always mean that the address is a PO Box. There may be other reasons – perhaps you didn’t provide sufficient proof that you actually make use of the office (ie. no utility bill under your name). To prove a point, a PO Box is short for “Post Office Box”, which is a mailbox that resides physically at a post office. A PO Box always has the address format like the following:

PO BOX 1234
New York, NY 10001

VPM is not the post office, so none of the addresses, whether mailbox or physical office or home, are considered PO Boxes. From this, you can see that fintechs are just lumping a large group of reasons they reject you under a general category.

With all that said, VPM does not like working with fintechs for many of the reasons specified in this post and previous posts, but specifically for the fact that they are not banks to be begin with. Fintechs are considered a tech company that uses a bank to handle the banking and compliance. This extra layer generally creates more underwriting reviews both on the fintech side and the bank side. More underwriting means more requirements to fulfill.

Just to be clear, it’s possible to open accounts with fintechs, but you have to go through a lot more hoops to get approved. The complexity and hassle of working with fintechs is just too great for many people. That’s why VPM’s physical address services explicitly do not support fintechs because most people do not know how to navigate through this on their own. We make this clear on our website and when you fill out the questionnaire before you sign up for TruLease.

Recommendations
With that said, I personally have some recommendations on increasing your chances for approval:

  • Prepare a list of banks to work with. Every bank has different underwriting requirements, so while one bank may decline you, another bank may approve you.
  • Open bank accounts with traditional banks. Traditional banks have more control over their own underwriting process. Large institutional banks are also more stable financially and also have their compliance process battle-tested. Therefore, their underwriting review is easier to understand.
  • Open bank accounts in person. By opening accounts in person, you reduce the bank’s risk due to identity fraud and other factors. Also, going to the bank in person shows that you’re physically in the U.S. This will provide more credibility to you residing in the U.S. and working at a U.S. office.
  • Install utility service. By installing a utility service under your name, it provides further proof that you have access to the office and make use of it. These days, a lease agreement by itself is usually no longer sufficient.

My personal advice is not to open bank accounts with fintechs as your ONLY/PRIMARY bank account. I would recommend that you go with a traditional bank for more stability and safety for your money. Fintech accounts are good as secondary accounts for their “tech features”. But it’s best not to keep too much money in a fintech account. Having more than one bank account will also help you in case one bank decides to suspend your account.

Hope this helps.