Hacker News Reader

Comment by metalspot | Hacker News Reader

they can fail all they want as long as you have less than 250K deposited. if you are using mercury as a transaction agent then you have no risk. you keep your deposits at a tbtf bank, then automate your transactions to run through mercury, so you pay lower transaction fees.

View on HN

that was also true of SVB

no, it was very different at SVB. SVB was loaning money to startups on the basis of exclusivity contracts where those startups were required to hold the money in SVB accounts, so they were basically paying SVB to create the illusion of having liquidity. that is a whole different game.

that is true for some customers not all and not the primary reason why it failed.

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.

they are guaranteed by the FDIC up to 250K, and mercury has set up their systems to spread deposits across multiple banks, to increase the amount guaranteed.

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.

Reply on news.ycombinator.com