e-Wallets & Bank Accounts
Until recently this page would have been headed ‘Bank Accounts’ but the increasing demand for quick and often app-based e-Wallets (Digital Wallets) we now give equal prominence to both.
Traditionally, newly established businesses would open an account with a full-service bank, probably in their local town or city. However, in the last 20 years, the Fintech (Financial Technology) sector has introduced e-Wallets aka Digital Wallets which are often app-based and operate across borders. e-Wallets tend not to lend and act purely as ‘Money Service Operators’. In most countries, they are not regulated as banks and don’t offer government-backed guarantees. They are more lightly regulated and very often use a mainstream bank to hold their clients’ funds.
Differences between an e-Wallet and a Bank Account
Banks are subject to ever tighter regulation, and this is reflected in their account opening procedures. Frequently, you will be asked for CVs for each of the principals, evidence of past trading, evidence of contracts together with whatever additional information their compliance department may dream up. It used to be that accounts could be opened in a few days, now you should assume weeks not days. There is also a question of minimum balances. Increasingly banks require their clients to keep substantial sums on their accounts.
Full-service banks are part of the financial infrastructure of a country and although heavily regulated there are often government-backed guarantees to depositors, e.g. in the EU €100K in the event of a bank’s insolvency.
If specialist services are needed, e.g. letters of credit, trade finance, loans, etc., a full-service bank is probably the best option. Not everybody needs this.
e-Wallets / Digital wallets
These are fast replacing banks in many areas. The advantages are that they are easy to open, do not require a personal visit, and you can be up and running in a matter of a few days. They do not have a branch infrastructure to support as everything is done online. Therefore, maintenance cost is generally low, at worst a few dollars a month, and often free.
E-Wallets specialise in international transactions and very often offer accounts in a range of currencies. They almost all offer a debit card, which again, is relatively cheap to use. For small businesses, an e-wallet often provides much better value than a traditional bank, but it important to check where the e-Wallet provider is regulated.
Please note. We can only assist with banking and digital facilities for clients establishing companies with us.
Establishing a company is generally a fairly straightforward and can be completed in a matter of days (once the required information has been provided). By contrast, opening a business bank account can be a frustrating experience.
Choosing a bank
Features of the selected bank
Do you need to visit your chosen bank?
Banks do prefer a personal visit where this is possible, but the majority now accept that this is not practical in most cases.
Important. Banks do change their account opening criteria frequently and without notice. We, therefore, recommend that you submit documents without delay.
Personal/Business account manager
Deposit and other investment accounts
Debit cards (linked to the bank account)
Account opening fees / Minimum opening deposit
Many banks and e-wallets levy an account opening fee, which can sometimes be very substantial.
Minimum opening deposit.
Almost all the banks require, or at least expect, clients to deposit funds immediately after opening an account. Generally this should be at least enough to cover a year’s bank charges. We suggest 500 as an absolute minimum.
Monthly maintenance costs / Transaction charges
Although the Mauritius banks one of our banks levies no monthly “maintenance charges” most do. This could be relevant for new businesses which wish to keep their fixed monthly expenses to a minimum. We recommend you to also check fees and charges on the bank’s website.
Transaction charges. e.g. ‘SWIFT’ payments.
Outward transfers always attract charges. Transfers between “own” accounts or accounts at the same bank are usually free of charge. Some banks charge for inward payments as a “processing fee”. Although SEPA transfers are generally free of such charges.
e-Wallets & NeoBanks
First, what is ‘e-wallet’ or ‘digital wallet’? As defined by Investopedia ‘Digital wallets are financial accounts that allow users to store funds, make transactions, and track payment histories by computer.’
e-Wallets, by comparison, are lightly regulated although the safeguards are fewer. PayPal was amongst the first e-wallet, but in the last five years, many more have come on to the market. Some e-Wallets specialise in specific areas, e.g. very cheap international transfers or credit card processing.
As with banks, it is crucial to know:
• what you want
• whether your business will be accepted and
• to have all the documents necessary to submit when requested.
The additional information is often requested several days after the account has been nominally approved. In most cases, e-Wallets need to prove who you are and will need some documents regarding the company you plan to use.
Please be aware that it is not uncommon for e-wallet companies to periodically request more information about what your company is doing etc.
Digital wallets do not require a personal visit as account opening procedures are entirely online.
e-Wallets, by comparison, are considerably easy to open provided that you fit their criteria. Very often an account can be created within a day or two, although it is likely you will be asked for a piece of follow-up information at a later stage.