Getting set-up with a merchant account for a small business owner in Canada can be over whelming and confusing, especially since most references found online tend to be information on American merchant account services. This wiki is intended to help Canadian entrepreneurs with understanding the basics and what their choices are when it comes to getting set-up with payment processing services in Canada.

Having a merchant account simply means you have the availability to process and accept credit cards as a method of payment in your business. In Canada there is also the interac association which allows direct debit processing from your personal bank account. The 1/3 of processing in Canada is done on Debit, followed by Visa & MasterCard. American Express is also an important card too, there are evensome references that Amex users tend to spend more.

Some interesting statistics you may want to know:



You can see from the statistics above that it would be down right insane not to offer interac as a method of payment in your business.


Is your business on the list above...? There are some very interest numbers right down to the average ticket price of your business model.



An interesting statistics that Canada is the number 2 user of debit cards in the world.


In Canada merchant account providers are broken into two categories:

1. Financial Institutions – Banks
2. Private Label Companies - ISO's (independent sales organizations)
   

Here is a list of many of the companies:

Banks:
Moneris
Chase-Paymentech
TD Merchant Services
Global Payments
Elavon
First Data

ISO's:
CollectivePOS
VersaPay
Cardex
Tangerine
Monex
POSwest
Optimal Payments

(There are many more ISO's that can be added to the list. Feel free to do so if you know more.)

Both types of card processors essentially have similar buy rates from Visa & MasterCard called interchange and they both make their profits by charging above what their buy rates are, usually referenced to as "discount rates" for merchants.

There is a ton of controversy over interchange in the US and the end results will affect interchange in Canada too. Basically Visa & MasterCard release their buy rates to the Banks and ISO's every Oct and April, which then entails the credit card processors to release their rates to the merchants.

Credit card processors mark up the interchange rates, but providing the processing services. (see current interchange rates for MasterCard in Canada) Whatever the rates are listed there you can expect them to be higher then that. If a merchant account service provider is charging more then what is listed on interchange then chances are greater then not that they are making up for it else where or you are misunderstanding or not reading the fine print.

A good reference for having all the 'right' questions lined up is: "Selecting a Payment Processing Vendor: 17 Essential Questions" found at Canadaone.com

Each company sometimes specializes in certain types of merchant accounts – i.e. internet merchant accounts, mo/to merchant accounts, retail merchant accounts, high risk merchant accounts, virtual merchant accounts, wireless merchant accounts, etc.

More useful references & resources:

Video explaining some great points about getting set-up with Internet Merchant Accounts:



Here is a link to a easy to use Canadian Merchant Account Calculator.

Here is a video on Debit Machines and/or Point of Sale Terminals: