Mercury, a San Fransisco digital bank that became the preferred banking partner for Nigerian startups after Silicon Valley Bank went under in March 2023, will close the accounts of Nigerian users by August 22, 2024, leaving them scrambling to find alternatives.
This decision aligns Nigeria with other countries on the ban list, including Afghanistan, Iraq, Somalia, South Sudan, Ukraine Liberia, Syria and 30 others.
The company said it supports U.S. companies founded by people across the globe, as well as founders and venture capital firms.
However, the bank said it currently cannot open accounts for founders living in prohibited countries and regions.
The prohibition means businesses and individuals living in Nigeria can no longer open new accounts or conduct transactions through the bank.
This move is expected to impact a substantial number of Nigerian entrepreneurs and startups that have relied on the bank’s services for their financial operations.
Explaining the importance of Mercury Bank to Nigerian founders, Seye Bandele, CEO of PaidHR, a Nigeria-based HRTech startup, said the bank simplifies the process for startups in Nigeria to conduct business in the U.S.
“Mercury provides banking services for Delaware Companies, which is usually a requirement for the kind of investment that most founders raise money on,” he said.
“So Mercury provided those banking services whether you’ve been to the US or not, from the US or not, we use something called a registered agent to register your company in the US, and then that registered agent will give you a physical address that the bank use to create your bank account.”
Bandele said although Nigerians are caught in the middle of the policy, Mercury has also been subject to numerous regulatory and compliance checks by their authorities.
“So whatever the reasons for their policy, I understand is just how Nigerians are caught on the wrong side of it,” he said.
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John Opeyemi, one of the bank’s customers, expressed his displeasure on X (formerly Twitter) on Monday.
Opeyemi said the bank had requested some documents a few weeks ago, which he promptly provided.
He said he was surprised to receive a notice of his account closure shortly after.
“We regret to inform you that, 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,” Mercury’s message to Opeyemi reads.
“Please know that his decision was not made lightly. We apologize for the disruption this may cause, and our team is here to help you work through the account closure over the next few weeks.”
