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    HomeEcosystem NewsKenya, South Africa, and Egypt Unaffected as Mercury Bank Reports Less Than...

    Kenya, South Africa, and Egypt Unaffected as Mercury Bank Reports Less Than 1% of Customers are Nigerian

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    In a strategic move driven by regulatory compliance and operational efficiency, Mercury Bank recently announced the closure of accounts in several countries, including those belonging to Nigerian customers. However, the bank emphasized that this decision will have minimal impact on its overall customer base, as Nigerian accounts constitute less than 1% of its total clientele.

    The decision to discontinue services in certain regions, including Ukraine, Pakistan, Croatia, and the Philippines, alongside Nigeria, comes as Mercury grapples with increasingly stringent regulatory environments and heightened scrutiny of financial transactions. Immad Akhund, co-founder and CEO of Mercury, explained that the move is aimed at bolstering the bank’s compliance program and ensuring sustainable support for founders in the long run.

    “While this week’s decision was hard, we also know that this is a decision that will help Mercury move our compliance program forward and enable us to better support founders in these regions in the future,” Akhund stated in a recent communication.

    Akhund acknowledged the inconvenience caused to affected customers and expressed empathy for international founders facing challenges due to the decision. He assured that Mercury aims to revisit this policy in the future, with the hope of re-establishing services in these regions.

    The closure of accounts in these countries follows a series of challenges faced by Mercury and its partner bank, Evolve Bank & Trust. A recent cyberattack on Evolve exposed sensitive customer data, leading to heightened concerns about data security and regulatory compliance. Additionally, the greylisting of some African countries by the Financial Action Task Force (FATF) has further complicated financial operations in these regions.

    While Nigeria is among the countries affected by Mercury’s decision, a list of restricted countries exempts Kenyan, South African, and Egyptian accounts. This suggests that Mercury aims to concentrate its resources on markets with higher potential for growth and less regulatory complexity.

    As of 2020, approximately 70% of startups founded in Africa but incorporated outside the continent chose Delaware, USA, as their legal home. However, between 2015 and 2022, Nigerian startups raised over $2 billion in funding, showcasing the country’s vibrant entrepreneurial ecosystem and its position as a leading hub for innovation and investment in Africa. This success, coupled with Mercury Bank’s recent closure of accounts belonging to Nigerian customers, raises questions about the impact of regulatory pressures on the country’s thriving tech sector.

    The incident underscores the importance of diversification in banking partnerships for startups operating in volatile regulatory environments.

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