Business banking fintech Mercury wants to offer its customers more ways to earn yield on idle cash while keeping that money in its ecosystem. The company today rolled out two Mercury-exclusive investment funds, partnering with Morgan Stanley Investment Management and State Street Investment Management.
The launch is the company’s latest effort to keep customers’ cash on its platform as competitors like Brex, Ramp and Rho offer their own ways for businesses to invest excess funds, including through high-yield investment products that offer liquidity.
Mercury wants to spare founders from “having to go out and piece together multiple different banking relationships,” CFO Dan Kang told This Week in Fintech. “We’ve negotiated some of the best yields for you, and you get this in one seamless platform.”
Customers can access the funds through Mercury Treasury, the company’s service for investing excess business cash. Mercury Treasury offered investment funds before, but those products were also available outside Mercury. The new funds are only for Mercury customers.
To qualify, businesses must hold at least $250,000 on Mercury’s platform. The annual management fee ranges from 0.15% to 0.60% depending on customers’ total balances, with larger customers paying less.
MCRYX, an ultra-short bond fund offered by Morgan Stanley Investment Management, is available now. It offers a net annual yield of up to 3.88%, though that maximum applies only to customers with more than $20 million in deposits across their Mercury bank accounts.
MRGXX, a share class of State Street Investment Management’s government money-market offering, is expected to become available in the coming weeks. It carries a lower expense ratio than Mercury’s previous government money-market fund.
The funds are designed to be liquid: Customers can retrieve money from the State Street fund the same day, while the Morgan Stanley fund can offer next-day access. Unlike a savings account, however, the investments are not FDIC-insured and may lose value. MCRYX has a floating net asset value and carries principal risk.
Kang said Mercury sought to limit those risks by selecting lower-risk investments.
“We want to make sure that the portfolios that we put forward really make sense, [and] that they’re safe and sound,” he said.
Mercury chose investment funds rather than a high-yield savings product because banks can change deposit rates or limit their highest rates to certain balances. The funds’ yields also fluctuate, but they’re driven by market conditions rather than set by Mercury.
“For a customer, having certainty that you will earn yield on your funds goes a long way,” Kang said. “The bank could pull that back at any moment in time.”
Later this year, Mercury plans to add Treasury Ladders, letting customers spread their cash across U.S. Treasury securities with different maturity dates.
In May, Mercury raised $200 million in a TCV-led Series D that valued the company at $5.2 billion.
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