Payment processing is very geographical. Each country has its own regulations with their own banking system. In Canada, any payment processor that offers a merchant account needs to be approved by the card brands they offer in that country, such as Visa, MasterCard, and AMEX. In addition, each payment processor needs to have a sponsoring bank.
Getting a merchant account in Canada
There is not a shortage of companies that will offer you a merchant account in Canada. In general, you can get a merchant account from an ISO or an acquirer. They both have the ability to offer the same technology and same rates. This is the most important thing to understand. ISOs and acquirers both have the same flexibility to choose which technology and rates they offer. This is one reason why it can be difficult to choose a payment processor. You can read more about the payment processing industry and how it works.
Acquirers tend to be larger than ISOs and are typically associated with banks. This sometimes means they are more rigid on process and timelines. ISOs do come in all shapes and sizes. They range from boutique businesses to multi-billion dollar corporations. ISOs tend to be more flexible in the technology they offer. This means that service levels can range from very poor all the way to some of the highest quality service available. TCM is an ISO which is focused on having word-class technology, white glove service, and lowest rates possible. Read more about the best payment processors in Canada.
Aggregated payment accounts in Canada
Aggregators, also known as 3rd party processors or payment facilitators, is another option for payment processing in Canada. You do not get a merchant account with an aggregator. Rather, you share a merchant account with many other businesses.
Some examples of aggregators are Stripe, PayPal, and Square. They can be very simple to sign up and their technology can be world class. Aggregators tend to be targeted towards smaller businesses that process less than $100,000 per year. They are structured to run thousands or millions of businesses, so getting customer support can be limited. This is why larger merchants tend to move to a direct merchant account. They like the reliability of merchant accounts and customer service.
Interchange rates in Canada
Interchange rates are the wholesale costs that all payment processors pay which are fees passed on to merchants. These are set by Visa and MasterCard and are not negotiable. Larger payment processors do not have access to lower interchange rates than even boutique payment processors.
Every country has its own set of interchange rates. The interchange rates in Canada include rates for each card type and each transaction type. High end credit cards (rewards, corporate, travel, etc) have higher interchange rates than basic credit cards. Transaction types where it is in-person have lower rates than remote payments (online, phone, etc). The theory behind this is there is more risk behind transactions for remote payments.
