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Can someone explain why in the world Evolve has my data? (I use Mercury and Wise for my company). I tried going to their website and I'm still completely cluele

Can someone explain why in the world Evolve has my data? (I use Mercury and Wise for my company). I tried going to their website and I'm still completely clueless. Edit: Apparently Mercury was using Evolve as their banking partner. I know this is super common w/ online neobanks, but I'm really confused as to why they always choose the most random obscure bank. Why not partner with a major bank, or Column?

deleted 2y ago
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ibash 2y ago
Fintechs partner with banks like evolve to do the actual banking. So when you open an account with mercury, under the hood they’re opening an bank account with a bank and sending transactions through it. There’s a lot of kyc/kyb regulation around financial services. Eg banks can’t provide services to certain people. So the underlying bank needs to know who you are. > Why not partner with a major bank, or Column? Column didn’t exist when mercury was founded. And it’s not that easy to secure a banking partner. Its not like signing up for a free checking account.
vikramkr 2y ago
parnering with these sorts of companies and providing banking services/underwriting is a complex product line of its own. The major banks aren't necessarily in that market or open for partnerships. And being big doesn't mean they'd be better at it - Goldman's partnership with apple is an example of the big bank not exactly getting it right. These are very complicated negotiated partnerships, not exactly plug and play lol.
jldugger 2y ago
Wise also previously used Evolve, so it's not exactly random. One imagines the fact that it's cheap explains why it was used by these services and at least partially why it got hit by ransomware.
spatulon 2y ago
After Wise moved away from Evolve to Community Federal Savings Bank, they gave me new account details that included an address in New York. Looking that up on Google Maps and Street View, it appeared to be a small branch in Brooklyn, on a street that looked immediately familiar to me as the starting area in Grand Theft Auto IV.
trollbridge 2y ago
An act of Congress (I believe it was Dodd-Frank) capped debit card fees at a very low amount (fractions of a precent). An exception was left in for small banks to continue to charge credit-card-like rates for debit cards, around 2%. Since then, every fintech has had essentially the same business model: - Come up with some kind of "innovative" thing to sell consumers on that results in them generating debit card transactions. (Online bank account, instant international money transfer, loan, etc.) - the trick is that to get the money, you swipe that debit card. - Partner with some small bank so that they are one the one providing the debit card. The law essentially has a loophole on it allowing this. - The fintech company sets up essentially everything, with all the small bank does is have automated accounts created for cardholders when the fintech's software says so. No money is kept in the customer account until the moment of that debit card swipe - then it is instantly transferred in and instantly transferred back out for the payment. - This requires reserves, but the fintechs and small banks collaborate on how to get good interest on the reserves involved. There are now fintechs which offer "fintech as a service" which will set all of this up for a tiny bank who can then offer this to any other fintech with almost no involvement from the tiny bank. All they have to do is sign a few papers. The definition of a big or small bank is based on the amount on deposit, so they are careful to not actually have any money on deposit. Congress needs to correct this abuse, immediately, and only allow the larger debit card fees for traditional checking accounts held by consumers where the money involved is held on deposit at that bank. Edit: one of the major problems here is that small banks are often not staffed for adequate cybersecurity for global operations like these; they do just fine doing hometown community banking, but are very vulnerable to being cracked like this. Yet another reason small banks that are providing big-bank services should be regulated like big banks.
- cal5k 2y ago
  The key to keeping debit card fees down isn't to legislate a fee cap, it's to make payment rails more open and competitive. Why are regulators still attacking stablecoins, for example, when they represent one type of innovation that could actually lower transaction costs? Creating a legislative framework that encourages innovation rather than stifles it would make a lot more sense than trying to micromanage fees.
leishman 2y ago
> but I'm really confused as to why they always choose the most random obscure bank. Why not partner with a major bank. Because major banks won't support startups looking to compete with them. Why would JPM, BoA, etc. service Mercury who is going after their SMB business banking vertical? Banking is a cartel in the US. The bank lobby makes it as hard as possible to compete with them.
- Scoundreller 2y ago
  > Banking is a cartel in the US US has more banks than any other country by a factor of 10. https://www.helgilibrary.com/charts/what-country-has-the-most-banks/ https://www.helgilibrary.com/charts/what-country-has-the-mos... And #4 for branches per capita: https://www.theglobaleconomy.com/rankings/bank_branches/ https://www.theglobaleconomy.com/rankings/bank_branches/ 7x as many branches per person as Canada Sure, those data sources are a bit sus, but I'm sure they're relatively correct. And dunno how credit unions play into it.
  - 55555 2y ago
    You're right. For the argument for the other side, the top four largest banks—JPMorgan Chase, Bank of America, Citigroup, and Wells Fargo—collectively hold approximately 43% of all deposits in the United States, and in some ways they are self regulating or have a revolving door with their regulators. But we certainly have a lot of banks and anyone can buy a small one and give the banking business a shot.
hipadev23 2y ago
> Why not partner with a major bank, or Column? Yeah, why didn't Mercury partner with a well-established, vetted, and recognized bank like SVB?
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trevor-e 2y ago
FYI Stripe (and many other fintechs) uses Evolve extensively for many of its products too, e.g. Stripe Treasury. https://stripe.com/newsroom/news/treasury https://stripe.com/newsroom/news/treasury > With Stripe Treasury, platforms can offer their users interest-earning accounts eligible for FDIC insurance in minutes, enabled by Evolve Bank & Trust.
aketchum 2y ago
Column does not offer many of the options that other bank providers do, is fairly expensive, and may not have been in existence when Mercury chose their vendor. Evolve is not a "random obscure bank" - it is a bank that pivoted to have a main business model of providing b2b platform banking instead of consumer banking. The major banks don't get into this game because the regulations on banks get much stricter the larger you get. So the fintechs are incentives to partner with "small" (this means sub $50 Billion in AUM) banks to deal with the minimum amount of necessary compliance (still a LOT of compliance working with small banks)
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ibash 2y ago

Fintechs partner with banks like evolve to do the actual banking. So when you open an account with mercury, under the hood they’re opening an bank account with a bank and sending transactions through it. There’s a lot of kyc/kyb regulation around financial services. Eg banks can’t provide services to certain people. So the underlying bank needs to know who you are. > Why not partner with a major bank, or Column? Column didn’t exist when mercury was founded. And it’s not that easy to secure a banking partner. Its not like signing up for a free checking account.

vikramkr 2y ago

parnering with these sorts of companies and providing banking services/underwriting is a complex product line of its own. The major banks aren't necessarily in that market or open for partnerships. And being big doesn't mean they'd be better at it - Goldman's partnership with apple is an example of the big bank not exactly getting it right. These are very complicated negotiated partnerships, not exactly plug and play lol.

jldugger 2y ago

Wise also previously used Evolve, so it's not exactly random. One imagines the fact that it's cheap explains why it was used by these services and at least partially why it got hit by ransomware.

spatulon 2y ago

After Wise moved away from Evolve to Community Federal Savings Bank, they gave me new account details that included an address in New York. Looking that up on Google Maps and Street View, it appeared to be a small branch in Brooklyn, on a street that looked immediately familiar to me as the starting area in Grand Theft Auto IV.

trollbridge 2y ago

An act of Congress (I believe it was Dodd-Frank) capped debit card fees at a very low amount (fractions of a precent). An exception was left in for small banks to continue to charge credit-card-like rates for debit cards, around 2%. Since then, every fintech has had essentially the same business model: - Come up with some kind of "innovative" thing to sell consumers on that results in them generating debit card transactions. (Online bank account, instant international money transfer, loan, etc.) - the trick is that to get the money, you swipe that debit card. - Partner with some small bank so that they are one the one providing the debit card. The law essentially has a loophole on it allowing this. - The fintech company sets up essentially everything, with all the small bank does is have automated accounts created for cardholders when the fintech's software says so. No money is kept in the customer account until the moment of that debit card swipe - then it is instantly transferred in and instantly transferred back out for the payment. - This requires reserves, but the fintechs and small banks collaborate on how to get good interest on the reserves involved. There are now fintechs which offer "fintech as a service" which will set all of this up for a tiny bank who can then offer this to any other fintech with almost no involvement from the tiny bank. All they have to do is sign a few papers. The definition of a big or small bank is based on the amount on deposit, so they are careful to not actually have any money on deposit. Congress needs to correct this abuse, immediately, and only allow the larger debit card fees for traditional checking accounts held by consumers where the money involved is held on deposit at that bank. Edit: one of the major problems here is that small banks are often not staffed for adequate cybersecurity for global operations like these; they do just fine doing hometown community banking, but are very vulnerable to being cracked like this. Yet another reason small banks that are providing big-bank services should be regulated like big banks.

cal5k 2y ago
The key to keeping debit card fees down isn't to legislate a fee cap, it's to make payment rails more open and competitive. Why are regulators still attacking stablecoins, for example, when they represent one type of innovation that could actually lower transaction costs? Creating a legislative framework that encourages innovation rather than stifles it would make a lot more sense than trying to micromanage fees.

leishman 2y ago

> but I'm really confused as to why they always choose the most random obscure bank. Why not partner with a major bank. Because major banks won't support startups looking to compete with them. Why would JPM, BoA, etc. service Mercury who is going after their SMB business banking vertical? Banking is a cartel in the US. The bank lobby makes it as hard as possible to compete with them.

Scoundreller 2y ago
> Banking is a cartel in the US US has more banks than any other country by a factor of 10. https://www.helgilibrary.com/charts/what-country-has-the-most-banks/ https://www.helgilibrary.com/charts/what-country-has-the-mos... And #4 for branches per capita: https://www.theglobaleconomy.com/rankings/bank_branches/ https://www.theglobaleconomy.com/rankings/bank_branches/ 7x as many branches per person as Canada Sure, those data sources are a bit sus, but I'm sure they're relatively correct. And dunno how credit unions play into it.
- 55555 2y ago
  You're right. For the argument for the other side, the top four largest banks—JPMorgan Chase, Bank of America, Citigroup, and Wells Fargo—collectively hold approximately 43% of all deposits in the United States, and in some ways they are self regulating or have a revolving door with their regulators. But we certainly have a lot of banks and anyone can buy a small one and give the banking business a shot.

hipadev23 2y ago

> Why not partner with a major bank, or Column? Yeah, why didn't Mercury partner with a well-established, vetted, and recognized bank like SVB?

deleted 2y ago

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trevor-e 2y ago

FYI Stripe (and many other fintechs) uses Evolve extensively for many of its products too, e.g. Stripe Treasury. https://stripe.com/newsroom/news/treasury https://stripe.com/newsroom/news/treasury > With Stripe Treasury, platforms can offer their users interest-earning accounts eligible for FDIC insurance in minutes, enabled by Evolve Bank & Trust.

aketchum 2y ago

Column does not offer many of the options that other bank providers do, is fairly expensive, and may not have been in existence when Mercury chose their vendor. Evolve is not a "random obscure bank" - it is a bank that pivoted to have a main business model of providing b2b platform banking instead of consumer banking. The major banks don't get into this game because the regulations on banks get much stricter the larger you get. So the fintechs are incentives to partner with "small" (this means sub $50 Billion in AUM) banks to deal with the minimum amount of necessary compliance (still a LOT of compliance working with small banks)

deleted 2y ago

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