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Small e-commerce shops require a bank that can meet most, if not all, of their business needs. It's essential to consider an online bank that can help keep track of your finances efficiently.
The Best Online Banks for Small Shops
Some of the best online banks for small online shops include Wise, Mercury, and Payoneer. They have customized their products and services to help small businesses compete favorably on the eCommerce platform. Here are some banks that we've reviewed and our take on what they offer:
- Best Overall Online Bank – Wise
- Best Bank for Domestic Transfers – Mercury
- Best Bank for International Transfers – Payoneer
Let’s take a detailed look at the features and services of these online banks.
Comparison of the best online banks for small online shops
| BANKING DETAILS | WISE | MERCURY | PAYONEER |
| Account Opening | Free | Free | Free |
| Card Withdrawal Fees | < $100 – $1.5 >$100 – 2% |
Free | 2% |
| Minimum Balance | -- | -- | -- |
| Domestic Transfers | Free | Free | Free |
| International Transfers |
Free for Wise to Wise $0.39 to a few dollars for everything else |
$5 flat | Varies |
| Conversion Fees | Varies based on currencies | 1% | Up to 2% |
| Card Fees | Free to issue. $5 to replace lost cards |
Free | $12.95 (for card activation) |
| Pros |
|
|
|
| Cons | Free to use, but ~$30 to open a balance account (but can hold multiple currencies for that 1 time cost) |
|
Occasional delays and cancelations of payments |
Best Overall Online Bank – Wise
Formerly TransferWise, the UK-based financial company, operates in over 100 counties and trades using 50+ currencies. In the US, it is registered with FinCEN and has over U.S. State and Territory Licenses for forty (40) states.
Wise renews its FinCEN registration annually while complying with its customer protection policies.
Key Features and Services of Wise
E-commerce Integration for Wise Bank
Wise services are integrated into major e-commerce platforms such as Amazon, Stripe, and Shopify. They don’t just facilitate payment, they also give your products access to bigger international markets and more territories.
It allows you to operate over 10 accounts using the major global currencies, which helps the business avoid exchange conversion fees. This feature is beneficial if you have operations in different locations or countries. You can conveniently receive payments from clients and pay suppliers' invoices regardless of location.
Wise Card
Using the Wise card, you can pay with or withdraw money from any ATM globally. Thanks to the low conversion fees at the prevailing exchange rate, you can pay using the local currency, thus avoiding markup fees.
Wise also allows you to set up a card for one-time use. This will help you avoid automatic monthly charges when you’re testing out the suitability of the subscription. Requesting a card is free, but they charge $5.00 for lost cards.
Unlike transfers, it’s cheaper to make large withdrawals than multiple smaller ones. ATM withdrawals of up to $100 have a flat-rate fee of $1.5, whereas amounts above $100 will accrue a 2% Wise fee. Wise allows you to make 2 free withdrawals of below 100 USD each month to boost your small businesses.
📷 by Wise | The business debit card help you send money abroad
Accounting Tools
The Wise Business account connects you to cloud accounting software like Xero and QuickBooks. These tools help you track transfers and offer a comparative analysis of the shop’s performance. Data encryption ensures all this data is kept private and safe in the cloud.
Such tools also enable you to set up automatic payments for recurring bills such as rents and salaries. There are hundreds of ready-made templates and report that you can customize to suit your business needs. The user interface is friendly and well laid out.
Quick Payment Systems
With Wise, you can send money to virtually any bank account worldwide. The best part is that recipients don’t necessarily need a Wise account. Wise will facilitate the payments through their regular banks.
Keep in mind that the Wise fee is calculated as a percentage of the amount you send out. Therefore, the more money you send, the more the cost you will incur. Wise is usually very transparent and upfront about their fee. You can easily check if the prices are sustainable for your small online shop.
Team Collaboration Features
Wise allows you to add several employees or partners to your account. The Multi-User Access (MUA) features give different levels of access to your Wise business account.
The admins have complete autonomy over the account; they can add other users, manage invoices and make payments. The viewer roles are limited. They have read-only access, besides being able to download statements and receipts.
You can delegate some of the responsibilities of the business to different users to manage, increasing the efficiency of business operations. Also, having access to the same information while working remotely enhances quicker decision-making and invoice clearance.
📷 by Wise | Hassle-free features to help you bank even when at home
Opening an Account
The process of creating a Wise Business account is relatively simple. You will require an email address, active mobile number, and an address. The business particulars will follow before you submit them for review. The Wise review process is extensive and may take a couple of days. Create your Wise Business Account here.
Safety Features by Wise
Wise uses a 2-factor authentication every time you log in and make a transfer. The verification can either be by a text message or biometrically (fingerprint or face recognition.) The 2FA also helps to keep track of all activities of your account. Here’s how you can make your Wise account more secure.
Best Online Bank for Domestic Transfers – Mercury
Mercury is a financial technology company that operates exclusively online. The bank wants to do away with the need for you to commute to access banking services. The services offered by Mercury are tailor-made for small online businesses to grow and manage their financials effectively.
Key Features and Services by Mercury Bank
No Extra Costs for Small Shops
Mercury provides banking services to small online businesses free of charge. There is no registration, overdraft, monthly, or transaction fee. You can also receive payments from domestic and international clients for free.
This is highly beneficial for a small online shop since it reduces the running costs and increases retained earnings. You can redirect these funds to conduct advertising or increase production, giving you a competitive edge over other eCommerce players.
User Permissions
Mercury allows for multiple user access to your account. You can customize the level of access based on the role of the member in the business. For example, while ‘card only users’ can view their transaction history, they can’t access the account balances.
For security considerations, you retain full autonomy of all transactions. You reserve the right to revoke any transaction initiated by your team members.
📷 by Global from Asia Reviews | Small shops use Mercury for scaling and growing
Automation Features
The Mercury API access enables you to automate and customize your banking. You can automatically program the API to pay your vendors based on your transaction histories. Once an invoice from a vendor is received, Mercury will transfer the money to their account.
Virtual Debit Cards by Mercury
Mercury generates these cards instantly after verification of your account. You can create multiple virtual cards and assign each to a specific user. These cards are ideal if you have a large team or need to pay several vendors.
You can track each card's transactions from the Mercury dashboard, and you'll receive a notification via email of any unusual activity. To avoid flagging your account, you can immediately freeze the card and submit a report.
🎥 by Global from Asia Review | Mercury Bank 101
You can open a Mercury account in a matter of a few minutes using your personal information. After opening the account, a new slide will pop up, which will direct you to a 6-step process to complete your business profile.
- Some of the documents that you required are:
- EIN (Employer Identification Number).
- Owners’ Profiles – Name, ID photo, Addressees
- Formation documents – Articles of Incorporation or Certificates of Formation
- EIN verification – Form CP 575, 147c letter, or SS-4
Upload all the requisite documents in either PDF, PNG, or JPG format. After completing this information, it will undergo a 2-5 day review, and you will receive a notification email.
Best for International Online Transfers – Payoneer
Payoneer is one of the oldest financial service providers operating solely online. It was founded by Yuval Tal in 2005 and is a registered US Money Service Business (MSB) and currently renders services in over 200 counties.
It has very competitive products and low exchange rates for international transfers. Transfers between 2 Payoneer accounts are usually free and instant.
Key Products and Features of Payoneer
Global Payment Services
Payoneer allows you to receive payments from multiple currencies using local bank transfers. It will provide you with the local receiving account details, and you will share these with your clients. The payment will be debited directly into your virtual account.
GPS helps the business avoid fees on international wire transfers. It will lower your overhead costs, resulting in more income. On the other hand, your clients can conveniently pay for services and goods using their preferred currency.
🎥 by Payoneer | They offer tracking of international payments too
VAT Payment Service
It is free to pay for VAT from your Payoneer balance. You only need to enter your payment details (the amount, bank account, and VAT number), and Payoneer will take it from there. You'll receive a prompt as soon as the payment is delivered. While the VAT payment gets disbursed immediately to the relevant authority, it may take up to 10 days to reflect. The speed and time it takes these institutions to process the payments vary in different countries.
Currency Conversion
Payoneer has the lowest conversion rates of the featured online banks for small online shops, 0.5%. The fixed-rate fee is relatively cheap and affordable to most small online businesses.
Moreover, there are no hidden fees. You can always verify the fees and the amount you will receive before submitting the exchange request. After conversion, the funds will reflect in your Payoneer account in a few minutes.
🎥 by Payoneer | Pay your global contractors in multiple currencies
Marketplace Integration
Airbnb and eBay are just a few firms that partner with Payoneer. Grow your business by selling your products across various marketplaces. The Store Manager is a simplistic database that will enable you to track all these payments from a single platform.
Security Features
Payoneer has the PCI Service Provider Level 1 certification. This compliance certificate is the highest level of accreditation a financial service provider can get. The company has implemented adequate security measures to prevent fraud and data breaches.
Payoneer uses Secure Socket Layer (SSL) encryption to shield all your online transactions. This encryption enables you to securely transmit confidential information such as credit card numbers and login credentials.
Opening an Account with Payoneer
Click the “Sign Up” icon on the Payoneer homepage. Select the Online seller option and register by filling in the personal details. Set up a Payoneer username, password, security answer, and finally, enter your account details.
Payoneer will carry out identity verification and credit check, which may take up to 2 days. You can start sending and receiving payments immediately after the authentication of the details.
Factors To Consider When Choosing An Online Bank
Safety and security of your business transactions and customers
The digital world is fast evolving, and so are cybercrimes. The bank you opt for should guarantee the safety of the business and customer confidential information. Some of the security features to look out for are:
FDIC Accreditation
The Federal Deposit Insurance Corporation provides comprehensive depository insurance to all the banks under its wing. In the unfortunate event the bank becomes insolvent, the FDIC ensures you don't lose your deposits. Typically, it covers up to $250,000 per depositor.
The corporation is also authorized to supervise the banks' activities and periodically sends state and federal regulators. They check whether the bank’s activities comply with consumer financial protection policies.
📷 by Negative Space | Always look for banks covered by FDIC
Multifactor Authentication
To keep your money safe, the bank should have a 2 or 3-step process to ascertain your authenticity. The authorization usually involves the generation of a One-Time Password (OTP) or/and biometric verification. The security code is sent via text message and expires within 30-120 seconds.
The bank should also send a prompt via text or email for all transactions and any attempts to edit your account details. While these security notifications might seem like extra work, they prevent unauthorized transfers or withdrawals.
Financial products and tools that meet your business needs
Before settling on a particular bank, you must first identify specific products you'll need for your shop. It will help to narrow down your search. Some of the factors to consider are:
- Integration – How to incorporate accounting tools and payment systems from marketplace vendors
- Transfer rates – What are the bank charges when sending or receiving payments domestically and globally?
- Does the bank offer credit/loan facilities to businesses?
Accessibility and ease of use
Accessibility refers to how conveniently you can obtain the services of the banks.
- Remote access – Use of Debit cards, mobile applications, ATM network
- User Interface – is the website easy to navigate? How
- Customer Service – Do the customer service representatives work around the clock? How promptly do they address queries or complaints from customers?
FAQs about Online Banks
Are online banks safe for my customers and me?
Yes, online banks provide a safe platform to conduct business if you implement their recommended safety and security protocols. Additionally, limit and regulate the parties that can access the accounts if you work with a team. Keep your passwords unique and update them regularly.
The bank, on its part, must be federally insured and encrypts all your customer data. Your funds and business transactions will then be beyond reproach by unscrupulous third parties.
📷 by Tima Miroshnichenko | look for online banks that can help make your business ops seamless
What are the most common documents required by online banks?
- Personal identification: a passport, driver’s license, or any form of legal identification.
- Employer Identification Number (EIN) or Social Security Number (SSN)
- Business license
- Ownership agreements
- Business formation documents: Articles of Incorporation or Certificate of Formation
Remember, the documents should be in soft copy since there is no physical meeting.
Are online banks FDIC insured?
Yes, FDIC ensures online banks that meet the statutory requirements. To determine if your bank is insured, use FDIC’s BankFind tool. This online database lists all names, FDIC certificate numbers, and the web address of legitimate FDIC-insured banks.
However, some financial institutions use affiliate banks. They may not be listed in the FDIC database, but operate under the same FDIC certificate number as the affiliate bank. For example, Evolve Bank & Trust, an FDIC member, covers Mercury.
Do online banks have limits on the amount of transactions?
Yes, there are limits on how much money you can send or receive daily and annually in your account. These limits vary between the banks. For example, the daily limit for sending transfers by Wise is $2,000 for debit/credit cards and $15,000 when using bank debits (ACH).
Why are my payments experiencing delays?
Delays usually happen as the banks try to ascertain the source of funds and the sender's identity. Federal and state regulations require online banks to scrutinize these transfers, especially if they involve large sums. Criminals use online accounts to launder money and fraudulent activities through fictitious invoices and payments.
Besides, you may experience delays if your account is unverified. The verification prompt typically comes after your account is active. Verification requires more details and documents than those requested during registration. It may be aggravating, but it will prevent delays or blockages on future transfers.
📷 Pixabay | Always follow security protocols recommended by online banks
The Buck Stops with You on Data Security
Online banking systems have invested heavily in cybersecurity to ward off hackers and data miners. But, still, some individuals will tirelessly find ways to gain access to customer accounts that are most vulnerable and exposed.
Always exercise caution when logging in and out of online systems. Some tips for your safety and security:
- Use a VPN when connecting to your account and avoid public Wi-Fi networks.
- Create unique passwords and regularly change them.
- To prevent identity theft, it's best not to back up these logins on the cloud.
What has been your experience when choosing and using online banks? Share with us know in the comment section below.
