A virtual payment terminal lets you sell your products/services 24/7/365. Your merchant service provider generally hosts the application. The “virtual” part is in the fact that all the processing occurs online in the application, rather than through a traditional stand-alone terminal or point-of-sale device or system. Apr 22, 2012 Selling credit card processing services to merchants is highly profitable due to the residual income it creates. This article teaches you how to go about it, from effective prospecting, to post-closing follow up. Begin by creating a few reliable credit card processing lead sources.
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It’s as challenging to run a business in Canada as it is in the United States, and not just because of the cold weather. Being able to accept credit and debit cards is every bit as important as it is elsewhere, but Canadian merchants suffer from a particular shortage of high-quality merchant services providers. While there are a number of reputable American providers that also do business in Canada, there simply aren’t all that many home-grown providers from which to choose.
It shouldn’t be this way. Regulation of the processing industry is generally more consumer-friendly in Canada than it is in the United States, and for this reason, some providers that operate in both countries offer better service to merchants north of the border. The Canadian government has promulgated a Code of Conduct for the Credit and Debit Card Industry in Canada that establishes a set of best practices and ethical guidelines to ensure that merchants are treated fairly. While compliance with the Code isn’t mandatory, peer pressure within the industry has resulted in most Canadian providers publicly pledging to abide by it.
Another unique issue faced by Canadian merchants is that EMV-compliant terminals are not designed to be re-sold or re-programmed. We normally recommend buying your terminals outright as the best and most cost-effective way to outfit your business with processing equipment. However, the inability to resell an EMV terminal in Canada means you’ll want to look for an alternative. Many Canadian providers offer month-to-month terminal rentals, which differ from leases in that you won’t be locked into a noncancelable long-term contract and you won’t be responsible for every single lease payment as soon as you sign up. Check out our article, Need A Credit Card Machine For Your Small Business? Don’t Lease!, for more details on why leasing is never a good idea.
In this article, we’ll give you an overview of the best merchant services providers available in Canada. Because different types of businesses have different needs, we’ll cover providers that are best for low-volume businesses and those that are a better all-around choice for more-established businesses. Finally, we’ll briefly cover the worst merchant services provider we’ve found operating in Canada, with an emphasis on why it’s so bad. You’ll want to know in advance what to look out for, and there are plenty of providers out there that have features you’ll want to avoid. As always, we recommend that you thoroughly research any provider you’re thinking of doing business with before you contact their sales team. Negotiate aggressively where it’s appropriate, and try to get quotes from several different providers before making a decision. Most importantly, review all contract documents thoroughly before you agree to sign up for an account.
Our Top Payment Processing Picks For Canadian Businesses in 2018
Table of Contents
Best All-In-One Platform Features For Canada: Helcim
Calgary-based Helcim (see our review) is hands-down the best overall merchant account provider available in Canada today. They’re also one of the best providers in the United States, too. Here are some of the highlights of their services:
- Exclusive interchange-plus pricing (Helcim calls it Cost+) for all merchants
- Month-to-month billing with no early termination fees
- Minimal monthly account fees
- All-in-one Helcim Commerce payments platform
- Free Helcim Commerce Mobile app (iOS and Android) with $30.00 mobile card reader
Helcim offers more pricing disclosures on their website than just about any other provider in the industry, so your costs are very predictable, and you won’t need to negotiate very much to secure the best possible deal for your business. They also include a number of in-depth articles explaining how credit card processing works, including exposing many of the deceptive advertising tricks used by other providers.
With Helcim, fairness is the name of the game. Helcim charges affordable prices and has one of the most transparent sales policies of any processor out there, Canadian or otherwise, as we mention in our post, The 5 Best Small Business Credit Card Processing Companies. Everything is completely laid out on the table, with crystal-clear fee disclosures so you’re never again hit with a bill like a punch in the stomach. This type of fairness and transparency is what’s lacking in a lot of processors, and hopefully, the industry takes a cue from these guys.
Pros:
- Exclusive interchange-plus processing rates
- No long-term contracts or early termination fees
- Extensive account fee disclosures
- Minimal monthly account fees
- Excellent customer support
Cons:
- Not cost-effective for merchants processing less than $1,500 per month
- No EMV-compliant mobile card reader
Check out our full review of Helcim for more details.
Best Credit Card Payment App For Canada: Square
Square (see our review) is not an exclusively Canadian processor, but they serve smaller Canadian merchants quite well. Unlike a traditional merchant account provider, Square is a payment service provider (or “third-party processor”). When you sign up, you get an aggregated merchant account that is shared with other merchants using the company’s service. You won’t have a unique merchant identification number for your business, but you also won’t have any monthly fees or a long-term contract, either.
Square uses a fairly simple flat-rate pricing system, although the number of possible rates has grown quite a bit in recent years as they’ve expanded their offerings. Here’s a quick overview of the most common processing rates:
- Standard Point Of Sale & Appointments (For Individuals): 2.65% per transaction for credit cards; $0.10 for Interac Flash (debit) cards
- Square Appointments (For Teams): 2.5% + $0.10 per transaction
- Square Restaurants: 2.6% + $0.10 per transaction
- Keyed-in & Card-on-File: 3.4% + $0.15 per transaction
- Virtual Terminal: 2.65% per swiped transaction, 3.4% + $0.15 per keyed-in transaction
- eCommerce: 2.9% + $0.30 per transaction
Note that customized processing rates are available for businesses processing over $250,000 per year.
While this pricing system is very transparent and predictable, the rates are also on the high side. However, Square’s lack of account fees can save you a significant amount of money if you’re a small business. Square is most cost-effective for businesses processing $5,000 per month or less. Above that amount, you will probably save money (and enjoy a more stable, full-service merchant account) by signing up with a traditional merchant account provider. Highlights of Square’s basic service include the following:
- Free mobile app for smartphones and tablets (iOS and Android)
- No monthly account fees
- No account setup, application, or PCI compliance fees
- Month-to-month billing with no early termination fee
- Free Square Reader (magstripe only, requires headphone jack connection)
- Optional $29.00 Square Chip Card Reader (includes EMV capability, requires headphone jack connection) or $49.00 Contactless + Chip Card Reader (includes EMV and NFC capability, connects via Bluetooth)
A couple of things about Square that aren’t quite so terrific are that you don’t get the same level of customer service or account stability as you would with your own merchant account. But if you have a smaller business and want to start taking payments without a big upfront investment, Square is an excellent alternative to a traditional merchant account.
Pros:
- Predictable flat-rate pricing
- Ideal for low-volume merchants
- No monthly fees
- Affordable EMV card readers
- All-in-one payments system
Cons:
- Frequent account freezes and terminations
- Limited customer support
Be sure to check out our in-depth review of Square for more information about their numerous products and services.
Best eCommerce Platform With Payment Processing For Canada: Shopify
Although Square also supports online payments, eCommerce merchants will probably prefer a solution that’s geared more toward their unique needs. Shopify (see our review) provides just about every feature you might need to run an online business, including credit card processing.
The company offers a wide range of pricing plans, ranging from $9.00 per month for their bare-bones Shopify Lite plan to $299 per month for the Advanced Shopify plan. In Canada, you can choose between using either a third-party payment gateway or Shopify’s own Shopify Payments feature for credit and debit card processing. With Shopify Payments, you’ll have a very basic flat-rate pricing plan. Rates start at 2.9% + $0.30 per transaction for online transactions and 2.7% for in-person transactions. Discounts on these rates are available if you sign up for one of the company’s more expensive monthly plans. If you choose to use a third-party gateway, you’ll have to pay a Shopify Transaction Fee for each transaction in addition to whatever your gateway provider charges you. Shopify Transaction Fees start at 2.0% per transaction for the least-expensive monthly plans, and can be as low as 0.5% per transaction for the most expensive plans.
In selecting which plan is best for your business, you’ll want to carefully evaluate the processing costs associated with each plan, as well as how important the additional features are to your business. The Shopify Lite plan, for example, doesn’t include an online store or telephone customer support. You’ll be able to sell in person, via Facebook, or using “buy” buttons on existing websites, but that’s it. You’ll also have to rely on email and chat for any customer service issues that come up.
For most merchants, the Basic Shopify Plan ($29.00 per month) is probably the best way to start. You’ll still pay the highest processing rates (or the highest Shopify Transaction Fees), but you’ll get an online store with unlimited products, 24/7 telephone customer support, and a host of other useful features. When your business outgrows the constraints of that plan, it’s easy to upgrade to the next-highest level of service. Shopify doesn’t impose any long-term contracts or charge any early termination fees. However, you can get a pricing discount of 10% by paying for one year (or 20$ for two years) in advance.
Pros:
- Free 14-day trial
- Predictable flat-rate pricing
- Integrates with numerous third-party products and services
Cons:
- Processing rates are high for most businesses
- Inconsistent customer support
For more details on all of Shopify’s numerous features, please see our complete review.
Other Canadian Payment Processors
Larger companies looking for credit card processing services have different needs than small businesses, and sometimes going with a large, direct processor is actually more cost-effective than signing up with a small provider. Large businesses aren’t as concerned about the kinds of nickel-and-dime account fees that can be a real burden on a smaller business. Instead, they’re looking for the lowest processing rates they can find. A larger business will also have far more leverage to negotiate a better deal than a small business. If you’re looking for a large processor to provide the best service and lowest costs to your large business, we recommend Chase Merchant Services (see our review) and Moneris Solutions (see our review).
Chase Merchant Services
For Canadian merchants running larger, more established businesses, Chase Merchant Services (see our review) is a surprisingly good choice for such a large company. You’ll get a far more robust line of products and services than you will with a smaller provider, plus they’re a direct processor. Chase offers competitive rates and low account fees – something we don’t often see in a large processor.
As long as you buy your own credit card terminals, Chase will offer you month-to-month billing with no early termination fee (ETF). However, if you’d like to include a “free” terminal with your account, you’ll have to accept a long-term contract that comes with an ETF. While we always recommend buying your own terminals, this is a reasonable trade-off as long as you’re comfortable committing your business to a multi-year contract.
Pros:
- Interchange-plus pricing offered to most merchants
- Month-to-month contracts with no early termination fees (except in some circumstances)
- Terminals available for sale or rent – no leases
- Next-business-day funding for Chase business checking customers
- Few complaints relative to size
Cons:
- “Free” credit card terminal requires long-term contract
- Reports of mediocre customer service
If you own a Canadian business and like the idea of going with a major brand like Chase, go ahead and check them out.
Moneris Solutions
Toronto-based Moneris Solutions (see our review) is an amalgam of the credit card processing components of Royal Bank of Canada and the Bank of Montreal. It’s probably the largest credit card processor in Canada, or at least the largest one that’s primarily headquartered there. Of course, being the biggest doesn’t mean being the best, and Moneris definitely has its shortcomings. However, overall it’s a decent processor as long as you are willing to negotiate for the best terms you can get and read your contract documents thoroughly before signing up, so you won’t encounter an unpleasant surprise later.
We’d also point out that many of the most egregious complaints about the company came from its American customers. While Moneris previously used to operate on both sides of the border, its American division was sold to Vantiv in late 2016. Today, Moneris operates in Canada only, and the quality of service there is notably higher than it was in the United States.
Pros:
- Interchange-plus pricing available upon request
- Full range of hardware available for rent or purchase
- Extensive online knowledgebase
Cons:
- Standard three-year contract with $300 early termination fee per location
- Poor reputation for customer support
- Use of misleading sales ploys (e.g., offering $300 gift card for signing up – with tons of strings attached)
For more details about Moneris Solutions and what they can offer your business, check out our full review.
Worst Canadian Processor: Pivotal Payments
Pivotal Payments (see our review) is a New York-based merchant account provider that also has an office in Quebec. While we normally review and recommend the best and most well-known providers, it’s important to look at what the other end of the quality spectrum has to offer. We do this as a service to our readers not just to warn them about specific providers, but to expose some of the common deceitful practices that give the credit card industry such a bad reputation.
So, while Pivotal Payments may not be the absolute worst payment processor in Canada, they do serve as a good example of shady business practices within the industry that you should be aware of when looking for a provider for your business. In fact, the company has recently taken some positive steps in an effort to turn their service (or at least their reputation) around, and we’ve given them appropriate credit for this in our most recent review. However, several major problems remain and continue to cause problems for unsuspecting merchants.
Perhaps the company’s biggest challenge is its continued reliance on independent sales agents to market its accounts. Independent agents have a terrible reputation throughout the industry for misleading and unethical sales practices. Provided with little training and often paid on a commission-only basis, independent agents are under tremendous pressure to make a sale and frequently fail to disclose important contract terms when trying to sell an account. While there certainly are some highly experienced and ethical independent agents out there, the odds that you’ll find yourself working with one are unfortunately pretty low. Your best defense is to resist the pressure to sign up before you’ve had a chance to review your contract documents thoroughly and make an informed decision.
![Resell Payment Terminals Resell Payment Terminals](https://ujg1i3ze1133y9zav35eixy117m-wpengine.netdna-ssl.com/wp-content/uploads/2018/06/What-is-a-POS-System_ShopKeep-POS-769x513.jpg)
While Pivotal is now offering month-to-month billing to some merchants, their standard contract still includes a three-year initial term, plus an automatic renewal clause that renews the contract for six-month periods thereafter. Note that the automatic renewal periods are limited to no more than six months at a time under Canadian law. Unless the company is willing to include an additional benefit (such as a free credit card terminal) with your account, insist on a contract with month-to-month billing and no early termination fee. Be sure to get it in writing, also. Do not rely on any verbal assurances your sales agent might offer!
Another major problem with Pivotal that’s also common among other providers is the use of credit card terminal leases. Pivotal provides leased terminals through a partnership with First Data Global Leasing, one of the worst credit card terminal leasing companies in the industry. These leases are completely noncancelable, meaning you’ll pay far more than what the equipment is worth over the four-year (or more!) term of the lease. Fortunately, Pivotal Payments now offers terminal rentals to its Canadian customers. While you’ll still have a monthly payment for your equipment, you can cancel your contract and return the equipment at any time without penalty. It’s a reasonable alternative if you’d prefer to avoid the up-front cost of buying your terminals outright.
Pros:
- Interchange-plus pricing available in some circumstances
- Multi-currency and dynamic currency conversion support
Cons:
- Extensive use of independent sales agents
- Failure to disclose important contract terms
- Long-term standard contract with early termination fee
- Expensive and noncancelable credit card terminal leases
- Poor reputation for customer service
For more details on Pivotal Payments, take a look at our full review.
More Alternative Payments
If you process less than $5,000 per month in credit/debit card payments, in Canada or elsewhere, then it makes more sense to go with what we call a payment service provider (PSP) or “third-party payment processor.” Companies like Square (mentioned above) and PayPal allow you to accept credit cards without having to get a full-service merchant account.
PSPs offer the following advantages and disadvantages:
Pros:
- Month-to-month billing with no early termination fee (ETF)
- No monthly or annual account fees
- Simple, flat-rate processing rates
- Free or low-cost processing hardware
Cons:
- Higher processing costs than interchange-plus pricing
- Greater risk of account freeze, suspension, or termination
- Inadequate customer service
Here are a few additional payment service providers that we like and recommend:
- PayPal – Offers brick-and-mortar, mobile, and online payments
- Stripe – Exclusively for online and mobile payments
- 2Checkout – Exclusively for online and mobile payments
Final Thoughts
As we’ve noted above, Canadian merchants don’t have nearly as many merchant account providers to choose from as do those in the United States. Nonetheless, there are still a few genuinely excellent providers available, as well as a lot of merely average ones, and even a few truly terrible providers that you should definitely avoid.
Small businesses that are ready to step up to a true merchant account can get the best prices through Helcim. For smaller businesses that don’t need a full-service merchant account, we recommend Square as the best and most cost-effective choice. Larger businesses might get lower processing rates from either Chase Merchant Services or Moneris Solutions (see our review). For eCommerce businesses, Shopify (see our review) is the best way to integrate credit card processing into an all-in-one solution.
If you’ve had any experience with any of the providers profiled in this article, or you know of a great processor that we haven’t covered, please be sure to tell us about it in the Comments section below. Thanks!
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