Banking for the uISV

One decision you’ll have to make about your uISV is where you send all your hard-earned money.  This gets a bit more complicated if you’ve got an international operation, so hopefully this will be of use to some folks in that circumstance.

Can I Get A US Bank Account Without Residing In the US?  This is easily the most frequent question on the Business of Software boards about banking.  The short answer is yes.  The long answer is “America didn’t become the world’s largest economy by saying no to greenbacks, and billions of dollars passes through millions of foreigner-controlled accounts every day.  Forget what you’ve heard about the Patriot Act, if you’re not on a watchlist this actually isn’t that hard, provided you can find a bank which will let you.” 

 The key obstacle you’ve got to overcome is called Know Your Customer, a regulation that requires that banks know who they are doing business with (i.e. that their account holders are not fictitious fronts for Bad People).  Many banks interpret that as meaning you need a branch visit, but that is hardly universal.  Citibank, for example, will take a driver’s license number over the phone as sufficient for KYC.  That doesn’t help you if you’re in Romania, of course.  What does is banks which are controlled by a non-banking organization, such as E-Trade Banking, which is a financial services arm of an online brokerage.  You can open an E-Trade investment account from just about anywhere.  Then, if you call their customer support line and ask to have banking services added to your account, they’ll take the existence of your investment account as sufficient evidence that you actually exist, and you’ll just have to fax over a copy of your passport to get a checking account, check card, and online banking activated.  E-Trade isn’t the only institution that will do this — many American brokerages have US accounts available worldwide, because one of the biggest reasons to have a US account if you are not US-based is to invest in US assets without paying an intermediary lots of money.

Got a recommendation for a bank for the rest of us?

Everyone wants different things in a bank.  I like decent interest rates, good online banking, and easy access to ACH payments (Automated Clearing House — when you receive money from Paypal or pay bills online, that is what you are using).  My top recommendation is ING Direct’s Electric Orange (its a checking account), for three reasons: Paypal and Google ACH payments credit within 1-2 business days, which means you get extra interest, you actually do earn interest on the checking account (3% unless you’re loaded), and they have a very responsive website.  They don’t have branch offices but I could literally go the rest of my life without needing teller help for simple transactions.  You need to have a checking account at a bricks and mortar (US) bank to open an Electric Orange account.

I also recommend that all uISVs get a credit card which pays cash back.  There are a billion providers here, take your favorite.  While I don’t recommend ever carrying a balance on your credit card, paying all of those recurring monthly expenses and software purchases on a credit card makes for easy record keeping, 1% off your expenses every month, and gives you some protection should a transaction go sour.  If you’re using Paypal the Paypal debit card gives you 1% back, but you’d have to keep sufficient amounts of money in your Paypal account to cover all purchases, and that requirement doesn’t sit well with me.

Advertisements
Explore posts in the same categories: Uncategorized

6 Comments on “Banking for the uISV”

  1. Codswallop Says:

    Hi Patrick,

    Great post.

    But can you get an internet merchant account without being a US citizen? If so, which bank do you suggest for that?

  2. Patrick Says:

    I have no personal experience with getting merchant accounts. My top suggestion is just use Paypal. Failing that, your best bet is establishing yourself at any US bank and then using the existence of that relationship and a friendly customer service representative in their small business department to jump through the hoops.

  3. starr Says:

    That’s a good tip about using a cash-back account for recurring expenses.

    I can imagine what a pain it must be for people overseas to deal with US banks. A few years ago when I lived in NYC, I couldn’t open an account just because my license was out of state!

  4. Jesse Says:

    I see that ING has a business savings account, but as far as I can tell, the Electric Orange terms of service specifically prohibit business usage; it’s a personal checking account only.

  5. Fernando Says:

    Anybody knows if this will will work for a non-us company too?

  6. Cristian Pascu Says:

    Is Romania that bad still? 🙂

    Cheers,
    Cristian


Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s


%d bloggers like this: