Wise is not FinTech's answer to Global Business banking

Are you an entrepreneur or a startup founder? You must be. Everyone in tech, mainly product managers, dabbles in this "moonlighting."


Moonlighting is an excellent way to hone your craft in directions that your current full-time job might not offer. Building something is also exciting and intellectually stimulating and might afford the very few a stab at early retirement.


It is one of many suggestions in my book Gangsta Vision. This book guides those who feel stuck in their career and are looking to break into senior leadership. I'm done with my plug, so let's move on. 🤓


When moonlighting becomes serious.


For many of us, myself included, most of these side projects go nowhere. I have a google sheet with a graveyard of ideas. In this document with 100+ rows, you'll find a ski trip planning concierge (SlopeFindr), a disco jazz coffee shop for remote workers in 2010 (Rendezvous), a fully autonomous cradle (Nanny McSnooze), and many more silly names and not so silly ideas.


These ideas never saw the light of day beyond a small group of people. The good thing about exploring and discussing these ideas with trusted connections is that it helps you tease out the execution challenges. After this process, you start to feel the effort to bring this idea to life, and your heart will tell you if you care for it enough to expend more energy on it.


Many years later, Jason Gardner, founder of Marqeta, revealed the secret of the best ideas - "they will not let you go to sleep."


I experienced this feeling when Ian Andal and I worked on Plangaroo.com, back in 2016.


We had consumed an overwhelming amount of data that millennials would travel extensively after they graduated from university. The travel industry bulletins were confident that these new grads would be willing to pay for someone else to plan their trips. We believed that Plangaroo was the adventure travel concierge consumers were waiting for. Investment activity gave us more confidence in our hypothesis. Our market heated up when Paul English (former CEO of Kayak) founded Lola.com. They built a travel concierge chatbot. We simply obsessed over our competition, believing the one with the best UX would win.


History proved us wrong. Lola burned through $90MM and was acquired by Capital One for their engineering team. Since we were bootstrapped, we barely made or spent money, and the product didn't go anywhere. Most of the other companies have disappeared completely. Today Plangaroo.com is a helpful free site for anyone planning a trip to Sri Lanka. That's all that came from it.


We should have listened more to our customers and taken their feedback seriously. Some things we had heard:

  • I've never had to pay for an online travel site to suggest an itinerary. Why should I pay you?

  • Planning the trip is the most fun part of going on a holiday! Why would I give it to someone else?

  • I'm willing to pay you a fee to plan a trip if you can get me access to exclusive events.

  • I hate planning

This is exactly what TripActions did. They used the planning tool's success and interchange economics to pivot into a moderately successful FinTech.


When serious moonlighting becomes a company.


Once in a blue moon, one of your side projects peeks out, and it looks like this is going somewhere.


During the entirety of running Plangaroo, all expenses came from a personal credit card, we had no officially incorporated company, and the only contract was what we had with a CTO we brought on. Our cap table was in a Google doc which I can't find anymore.


When I founded Nimi last year, I wanted to do it correctly. I sat down with my accountant (Kevin), decided on an LLC, and ensured I got my EIN and incorporation certificate before I took on my first dollar of revenue.

The next thing Kevin told me to do was to open a business bank account.


After spending over four years in FinTech, I was finally excited I got to open a business banking account!

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My business banking needs


So Nimi is a product advisory and staff augmentation company. At the infancy of our business, all of our customers were in the US, so USD was our primary currency. Most of our employees are in Sri Lanka, so salaries must be settled in LKR (Sri Lankan Rupees). In a blog post I wrote last month, I highlighted some of the infrastructure challenges with building a financial wellness product for our team in Sri Lanka: The barrier to entry for Embedded Finance is too damn high (gangstavision.com) (WARNING, Long read!)


So when considering a business bank, here are features that were most important to me:

  • Ability to receive incoming payments in USD, GBP, SGD, or EUR as wires or ACH.

  • Ability to send money cross-border to Sri Lanka.

  • Access to a credit card for business expenses such as AWS fees, software licenses, computer hardware, and SaaS software.

  • Get rewards for my expenses.

  • Integration with my accounting system (Quickbooks).

  • Earn interest on my cash balance (nice to have).

Other features, such as cash deposits, accepting card payments online or offline, and access to the branch at the time, did not seem relevant to me.


Based on my experience at the time, the only name I could think of was TransferWise. So let's dig into my experience.


Wise has the best FX rates but wasn't practical.


Creating a Wise business account was very easy. After the three below steps, I had to set up my 2FA and a password. It took a minute to get started.


Once the account was created, the wizard asked me if I had any other Wise accounts and offered to merge them in a single UI view. It seemed convenient, so I went ahead and did that.


After creating the account, I was notified that I needed to provide additional documentation to verify my business account. I provided my EIN and incorporation docs and was taken to the funding step.


Before I funded my account, I wanted to ensure I could take funds out. A quick visit to their fee calculator completely froze me.


Wise only allows a maximum of $2,750 per transaction
Wise transaction limits were a dealbreaker

Wise does indeed offer excellent, guaranteed exchange rates. Compared to JMPC's rate from the same period, you can see that Wise will give me 4.39% more LKR per dollar.



But to look at the economics, you have to compare more realistic amounts. Let's say I need to send $20,000 to Sri Lanka; it would be a single wire with eight transactions through Wise.

Send via...

Chase

Wise

Transaction Amount

$20,000

$2,800 * 7 + $400

Number of Trx

1

8

7 more

Fees

$5

$118.42*

22.68x more

FX

349.9813

365.375

+4.39%

Received in LKR

7,017,666.00

7,307,500.00

​+289,834

*Calculation: ($16.47 x 7) + ($3.13 x 1). Not including Direct debit fees or other incidental fees such as wire transfers.


Even though the transaction limits cause fees to go significantly higher, the resulting net 289,834 LKR in additional funds is equivalent to USD 793.25 at Wise's rate. Even taking out the incremental $113.42 in fees, the net positive of using Wise is USD 674.83 (3.4% more dollar value), assuming everything goes right.


And everything did not go right. To reduce the "Direct debit fee," we must ACH funds (0.16% fee) from our existing bank account to the Wise Omnibus. 100% of the time, these transactions were flagged as fraud, and I had to call my bank to release the funds. If the money needs to be moved quickly, I must resort to domestic wires or pay the direct debit fee.


Since fees are taken out of the "Amount to Send," it created additional complexity for my bookkeeping. The administrative burden increases if I need to send larger amounts, such as $50,000.


There must be a better option, right? Could I apply for a preapproved Wise Business banking account to remove these limits?


No dice for Wise.

Unfortunately, no. Earlier, as we were so strapped for cash, I had to use Wise to maximize the FX on each dollar. Over time we found a better solution that scaled and offered even better FX rates.


Brex is for startups, but not my startup.


"Oh, that billboard you saw for my company? We got Brex rewards for that."















Every startup founder in the past few years has dreamed of starting a company to get Brex rewards. Maybe it was cachet. But this VC-funded rewards party exists no more. Many know about Fintech Startup Brex Ending Small Business Cash Management products.


But a year and a half ago, this was not the case. So I went through the onboarding process with much enthusiasm. Signing up for Brex was much more involved than creating a Wise account.



I was kicked out of the process. I'm assuming that given I'm not VC-funded and am not spending enough every month, Brex wasn't interested given the interchange potential.


Since I couldn't successfully create an account for Brex, I can't speak to their FX features, even though they offer no fees for wires.


Trying to get Ramped.

"Screw Brex!" - my thoughts exactly.


Next up was to try Ramp. I had tried Ramp over a year ago, but my business bank was a few hundred dollars back then. Since Ramp had a $50,000 minimum (now increased to $75,000), I was rejected immediately after applying.


I went through their onboarding flow again (which resembled the old Brex flow) and was able to submit my application.


Now that Brex for startups doesn't exist anymore, will Ramp be lax on linked bank account balances? Who knows?



A few minutes after the application, I received a text from a rep at Ramp to set up a call. I'll update this post based on what has transpired since.


Global Borderless Wallet with Airwallex


Last year, after my challenges with sending funds to Sri Lanka with Wise, I received a recommendation from a former Bond colleague of mine Meera Sundaramurthy to try out Airwallex.


The Airwallex signup is similar to the Ramp one, except that you can create an account immediately without having a manual review or phone call.


Where Airwallex shines is the ability to accept payments from customers in different geographies.


In preparation for onboarding our first customer in Singapore, we waited on HSBC for over three months and finally gave up. When we finally discovered Airwallex, we were able to add an SGD wallet within a minute. It was a gamechanger for us.


As you can see below, Airwallex immediately creates an account for each currency you want to hold, with the appropriate bank account information (account number and routing number for US accounts). Note: Verification for GBP and EUR accounts takes a few days.



In the international transfers section, I found that the exchange rate to LKR wasn't as good as Wise (but there were no fees). Unfortunately, Airwallex has the same problem with a $2,800 limit for each transaction.


By the way, Airwallex fixed a bug where the available balance wouldn't show the exchange rate if the available balance were zero. This could be a deterrent, especially if the user wants to review the rates before funding the account. Glad they fixed it, as seen below for the new USD wallet I created.



Airwallex has proven to be a solid service for accepting payments from customers outside the US, and we will continue to use it for the foreseeable future.


Bank Novo is an interesting option that didn't fit my needs.


When I came across Bank Novo in my google search, I first paid attention to the QBO (Quickbooks Online) perk.


Bank Novo seems to be a great solution for an online merchant who is currently using Stripe and has some needs for consumer direct and channel marketing. The entire package is marketed to that sort of business.


A big dealbreaker for me was that Bank Novo didn't support international wires natively - they had an integration with Wise for cross-border, which had the same transaction limitations.

I ended up going with Chase, SVB, and Amex.


At this point of the article, if you paid attention to the images, you probably figured out which primary banking provider I went with for my business. 😏


"What bank has a branch closest to you? Just pick that as your primary banking partner." This was the advice my accountant Kevin, gave me as soon as I incorporated my company.


But I did not take his advice as I believed there was a "better" solution for me, courtesy of FinTech. After spending two weeks fumbling around, I decided to give the "big banks" a shot.


The top banks I would consider working with were Capital One, American Express, First Republic, and Chase. Given the first two didn't have any branches near me, I decided to focus on the last two. Chase was offering a signup bonus for a new account, so I decided to go that route.


Signing up online with Chase was kind of a mess. I could not complete the process online, so I went to the branch. Within an hour, I could set up my account and have physical (temporary) and a virtual card in hand to start billing business expenses, checks, and a business checking account.

Given that I must travel internationally for work and the Chase Business cards charge fees for cross-border transactions, I needed to find a different provider for our expense card. I went with a simple no-fee card product, Blue Business Cash.



What has surprised me is how personal banking with Chase has been. Since we get incoming payments from various companies, sometimes they get stuck. My bank manager sometimes informs me and rectifies it. Very rarely do I need to call in.


By building a personal relationship with the banking partner in the US (Chase) and our banking partner in Sri Lanka (ComBank), we have figured out the optimal solution for cross-border money movement.


The Chase wire service is cost-effective, fast, and accurate. I've also been able to send the occasional Zelle or Check payment for a vendor who doesn't accept ACH.


One of my former colleagues Sara Rubenstein asked that I look into SVB (Silicon Valley Bank) for our growing banking needs. I was introduced to the startup banking team. I was first using a platform called SVB Go which had a modern look and feel. It still had some rough edges (connecting to QuickBooks was not straightforward). While the SVB Innovator card has been excellent (no annual or foreign transaction fees), the bank account hasn't lent much use to me. I've found it hard to move funds into the account via ACH, and the only way to bring funds is by wire, which has applicable costs on the Chase side.


Nevertheless, I never imagined these big banks could satisfy my small business needs.


Business Banking Summary


Below you can find a summary of my findings as of 9/13/2022.


Bank Account

Wise

Brex

Airwallex

Chase

SVB

Monthly Account Fee

$0

$0

$0

$0 with minimum $2k balance

$0

Yield

N/A

2.04%

N/A

N/A

between 1.5 and 1.75%

ATM

​$1.50* (up to $100 in 30 days)

2% (over $100 in 30 days)

$0

N/A

$0

$0

FX Commission

0.41% to 3.96%

$0

0.4% to 1%

High, unknown

$0

Account Funding Fee

ACH - 0.16%


Wire - $4.14


Debit card (consumer) - 1.22%


Debit card (business) - 1.33%


Credit card (consumer) - 4.05%


Credit card (business) - 4.33%

Free

Free

Free

Free

Account Withdrawal Fee

$1.05

Free

Free

$5-40 for wires

Free

Accounting Integration

Xero and QBO

Xero and QBO

Xero and QBO

QBO

QBO

Zelle

N/A

N/A

N/A

Yes

N/A

Business Credit Card

Card Cost

Foreign Transaction Fee

Rewards

Signup Bonus

Brex

Free

0%

Up to 7x

None

Ramp

Free

0%

None

None

Wise

$9 per card, $5 for replacement

0%

None

None

Chase Business Unlimited

Free

3%

1.5%

$750 Bonus

Chase Business Preferred

$95 annual fee

3%

3X shipping costs

$750 Bonus

American Express Blue Chas

Free

0%

2%

30,000 points

Silicon Valley Bank Innovator Card

Free

0%

None


What about Mercury and BlueVine?


I started searching for a banking provider in March of 2021. Since then, a lot has changed (as you saw with Brex and Ramp). I also found that two specific providers - Bluevine and Mercury, have changed their products and pricing.


BlueVine has no fees and offers 1.5% for checking account balances. I still find it subpar to SVB, which offers these rates for its MMA. SVB provides free wires and zero foreign transaction fees on its innovator credit cards.


Balance: Annual Percentage Yield:

  • $0 - $999,999.999 1.75%

  • $1M - $4.99M 1.50%

  • $5M+ 0%

I would guess that BlueVine is attractive to a business that is looking to also get a business loan from them, where they can provide a line of credit within 24 hours (Quickbooks Capital can do this too.)


Next, Mercury. I remember there being two tiers a year ago, and the more interesting tier had a fee and minimum balance associated with it. Looks like that has changed and so I went ahead and applied for a Mercury account.

Their new credit card has 1.5% cashback and no foreign transaction fees. Still inferior to SVB's Innovator Card or Amex Blue Cash.



The onboarding process for Mercury was beautiful. There seemed to be a single step that felt redundant, and I expect it was a remnant from merging forks together.



I'm looking forward to testing Mercury and taking advantage of their 2% interest for the checking account. Given all the items I've shared in this article, I'm still not confident that Mercury can be my primary banking provider.


The future is global small business banking. Today we have to piece together several solutions to meet our business banking needs. And the reality is that Chase is at the center of it.


Who will deliver to take on Chase?

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