But given https://techcrunch.com/2021/02/19/brex-applies-for-bank-char... and the fact that https://www.brex.com/svb-emergency-line emerged literally overnight... it's unclear to me whether these strategies are truly robust, or whether much of this is hype driven by Thiel and other Brex etc. investors - who are, at the very least, incentivized to capitalize on this situation.
We use their Treasury account type for most of our cash. It's split between Morgan Stanley and Vanguard funds.
Now, if Mercury fails it's going to be a pain in the ass to get at the money in these backer accounts. So we keep what we need for 2 months of operations with another bank. We were using SVB for this, now we have to find a new emergency backup bank.
Brex and Ramp are similar to Mercury.
if one or more of those tiny regional banks fail in the same way SVB did I don’t see why there wouldn’t be an issue as a customer of Mercury
it’s also unknown what percentage of these banks’ total deposits are Mercury deposits now. if it’s a lot then you have the same risk of a bank run on the Mercury side disproportionately impacting the solvency of the underlying bank
and the problem is you know nothing about the financial health of the small banks that are white label providers so how can you say you’re confident in the management of these individual banks that Mercury is contracting with? you don’t know anything about them.
so, if mercury has a 1M FDIC guaranteed, then you can move 1M per day through their systems with 100% guarantee, but the risk that a bank fails on one particular day is very small, so maybe you can move 10M a day through them, with effectively no risk.
10M a day is 3.5B a year. very few companies are doing transactions on that level, so mercury scales up very well.
"Mercury checking and savings deposits are FDIC-insured up to $1M. As a broader effort, we are working on expanding all coverage up to $4M."