6 Top Payment Processors in Canada

Payments are the end goal of any business. To stay in business, we have to take payments and earn money. Of course, without the right tools, that’s impossible. When it comes to payments, one of the most important tools for any business is a payment processor. Without one, you can’t take a number of different payments, meaning that you may miss out on income by not offering the payment method your customer needs.

If you’re looking to expand the payments your business can accept, you might be looking for a new payment processor. Check out the top 6 payment processors in Canada below!

Key Takeaways

• A payment processor is a company that handles credit card transactions for a business.
• Payment processors work by communicating between merchants and banks in order to facilitate payments.
• A payment gateway is a tool, while a payment processor is a company that enables a credit card transaction for a merchant and customer.
• Fees for payment processing vary depending on your business and its needs.
• A business needs to look for security, customer service, pricing, types of cards handled, and service methods in a payment processor.
• Our comprehensive list includes FreshBooks, Clearly Payments, Square, Stripe, Moneris, and First Data. 
• The choice of a payment processor depends on your business and its needs. Research and knowledge will help you choose the best one for you. 

Here’s What We’ll Cover:

What is a Payment Processor?

How Payment Processors Work

The 6 Top Payment Processors in Canada

Payment Gateway Vs. Payment Processor

Fees to Expect

What to Look For in a Payment Processor

Conclusion

Frequently Asked Questions

What is a Payment Processor?

A payment processor is a company that manages credit card transactions. Most businesses accept credit cards and debit cards. When a credit card transaction process is involved they usually trust a merchant account provider to take care of their payment processing. It’s an extra level of paperwork and time to process payments. That’s why payment processors exist!

Payment processors all follow the same process, for the most part:

1. The customer selects their method of payment

2. The payment processor communicates transaction details to the customer’s bank

3. The customer’s bank or payment provider confirms or denies the transaction based on available funds

4. The payment processor then sends the transaction information to the business’s or merchant’s bank

5. A receipt is generated for both parties

Payment processing is a lot more complicated than that, but this is the basic process. Payment processors make credit card payments possible. Because of advances in payment technology, they also allow for debit card payments and, more recently, online or mobile payments. Without this type of payment solution, many businesses would be unable to thrive.

How Payment Processors Work

When you make a purchase, either online or at a point-of-sale terminal, you decide how you’d like to pay. If you choose to pay by credit card this starts the payment processor’s job. The payment processor will connect to a software system called a payment gateway, usually through physical action, like keying in your card number, tapping, or swiping your card. The payment gateway will make the communication between where you’re shopping and your bank account but the payment processor gathers all the information and transfers the payment info where it needs to be. If the payment is accepted, it will be recorded in the merchant’s records. The processor facilitates the confirmation and transfer of the payment from the bank to the merchant. Before you know it, your transaction is complete!

The Steps:

Step 1: The customer decides to make a purchase or payment and how

Step 2: If the customer uses a credit card, they present their card or enter their details

Step 3: The payment processor connects to a payment gateway tool to connect to the customer’s bank or credit card.

Step 4: The payment processor gathers that information and transfers it to the bank and facilitates an almost immediate reply

Step 5: The reply is shared with the merchant allowing them to go ahead with the transaction

Step 6: The payment processor logs payment into the merchant’s account and allows for the deposit of funds from the bank or credit card company 

The Top 6 Canadian Payment Processors

If you’re looking for a new payment processor, these are some of the best options available in Canada. Take a look at each, and decide what fits your business’s needs!

1. FreshBooks Payments

FreshBooks Payments provides a way for businesses to take payments online. This program can be used alongside other business programs like invoicing services, making all processes streamlined. Their head office is located in Toronto.

FreshBooks allows businesses to accept payments in a variety of ways. They are able to process MasterCard, Visa, and American Express payments. They also accept Apple Pay, which can be a major advantage online. They also integrate with other payment services. By connecting with PayPal and Stripe, FreshBooks has you covered for all forms of payment. You’ll never have to worry about missing income again!

All of FreshBooks Payments’ pricing is transparent and proudly displayed on their website. They aim to charge the least amount in fees possible, which is good for any small business. Additionally, they provide a plethora of online payment tools that make your website a one-stop shop for business. If you’re looking for the best all-around payment processor, FreshBooks has you covered.

Click here to try FreshBooks for free.

2. Clearly Payments

Clearly Payments is a Canadian payment processor located in Vancouver. They aim to be Canada’s best possible service provider and provide low fees and excellent customer service. They have no termination fees and are transparent in their pricing. When selecting Clearly Payments, you get Canadian and United States payments coverage. They actually focus on helping with cross-border payments.

One of the perks of selecting Clearly Payments is the pricing method. They offer a flat-rated, monthly charge for their services. They also cover the merchant account. This means no extra fees are taken out throughout the month. That can be a huge plus for small businesses. 

The biggest thing that can be said about Clearly Payments is their attention to customers. They provide quick, friendly customer service by phone or email. They have an excellent relationship with their customers and rave reviews. This is one of the best reasons to choose Clearly Payments.

3. Square, Inc.

Square is one of the biggest names in payment processors, especially for small businesses. They were founded in 2009 in San Francisco, California. They are highly popular for merchants making less than $50,000 annually. That’s because they are an aggregator. This means that they provide a shared merchant account. If the revenue of your business exceeds that, it’s best to find another processor.

Square’s strong selling point is the fees that they charge. For most businesses, there are no signup fees or cancellation fees. However, the flat-rate pricing they offer depends on the payment method. Their credit card rates range from 2.75% to 3.4%. They also charge no monthly fees, which is a big plus.

The biggest issue with Square is its lack of customer support. Many reviews state that support is hard to obtain from the company. Some accounts are also closed without warning or reasons provided. This can cause a major disruption in cash flow. If you’re a very small merchant, Square is still an excellent provider. Most of the process is easy to get through, and customer support should rarely be needed.

4. Stripe Payments

Stripe is one of the more recent additions to the payment processing industry, founded in 2011. While that may be true, the fact is that they’ve taken the industry by storm. They started entirely online, looking to resolve the issues regarding online payments. Their competitors had a reputation for frustrating clients. The payment process would navigate customers away from the website, breaking immersion. Using Stripe eliminated that problem altogether.

For the most part, small software as a service (SaaS) providers should be using Stripe. It was designed with them in mind. Stripe’s fees are flat, with a rate of 2.9% plus $0.30 per transaction. This means that calculating your payment processing fees is easy.

The main issue that Stripe faces is in relation to their customer service. Like Square, many users of Stripe have a hard time getting the support they need. Their customer service is done via email and Twitter, with no option for phone assistance. This can become frustrating. If you want better customer service, you’ll need to find another payment processor.

5. Moneris

Moneris is another Canada-based payment processor. They were founded in 2000 and are based in Toronto. They are best suited for larger businesses with higher setup fees and a tiered pricing system.

Generally speaking, the setup fees surrounding Moneris are high. In addition to setup fees, they also require contracts. The contracts through Moneris generally last for 3 to 4 years. If a business wants to end the contract early, the cancellation fee is often near $250. It is recommended that contracts are reviewed in detail. These fees and the pricing model are much different than the other payment processors listed here.

Because they are a large company, Moneris does come with highly available customer service. They can be contacted 24/7. However, the wait times for phone calls tend to be high, and electronic response times are slow. This is still an improvement from some other payment processors.

6. First Data

Last on our list we have First Data. First Data was founded in 1967 and is based in Atlanta. They are best known for selling and reselling hardware terminals for taking payments. First Data is the largest payment processor in the world and is internationally established. If your business processes a large number of international transactions or global payments, First Data is a great option.

Pricing for First Data is not displayed anywhere. Their pricing model highly depends upon your business’s needs and the person you are working with. They are known for having variable contract terms. Along with those contracts come cancellation fees, as well. Understanding the contract entirely is a must before signing on with them.

Because they lack transparency, reviews of First Data tend to be based on contract fine print. Customers have problems with the contracts that they’ve signed, as they miss key points. First Data may be a great option for large businesses, but small businesses are better off with another processor.

Payment Gateway Vs. Payment Processor

In your search for a payment processor to handle your digital and card transactions, you may also come across the terms payment gateway and merchant accounts. These are integral parts of the payments process that are sometimes confused with one another. This article is specifically about payment processors, but understanding all three is imperative.

Payment Gateways

A payment gateway is a type of software meant for handling and transferring cardholder information. This transfer of information is highly important, as it is what allows businesses to receive payments. Think of it like a middleman between the payment processor and the merchant account.

Merchant Accounts

A merchant account is set up so that businesses can take payments from customers. It is a specialized bank account that receives transactions and works with point-of-sale systems. That said, it only accepts payments made by cards or other electronic means.

Some forms of a payment processor, payment gateway, and merchant account are all required to take payments from customers by electronic means. In many cases, you’ll find payment processors that are also payment gateways. Sometimes, they also provide merchant accounts, making the entire process simple. Finding a system that works for your customers and your business is important.

Fees to Expect

As a business owner, expenses are always a hot topic. Since payment processors are a service, of course, there are fees to be expected. Each provider has different fees associated with their services, but the most common ones are listed below:

• Start-up Fee: The fee charged for getting the software setup with your business
• Transaction Fee: The fee is taken any time a transaction takes place
• Interchange Fee: A fee that occurs between banks for card payments
• Termination Fee: Charged when service with a payment processor is terminated
• Gateway Fees: Fees charged by a payment processor for acting as a gateway

Most payment processors will charge some of these fees, but very few charge all of them. One can be a low-volume payment processor with flat rate pricing, others charge a monthly fee with a set number of transactions, and still, others will charge for services like cash advances. Knowing what kinds of fees will be charged makes deciding on a payment processor easier.

What to Look For in a Payment Processor

When selecting your next payment processing provider, be sure to examine these categories. Depending on how your business functions, some may be better than others.

Methods of Taking Payments

Payment processors come with different ways to accept payments online. Some offer integration with platforms you may already use, while others have proprietary hardware. There are a number of different ways to take payments, whether you have your business online or need a point-of-sale terminal, payment processors offer a variety of options. Some of the most popular are below:

• Online terminals (virtual terminals)
• Traditional credit card terminal
• Connected card reader
• Full cash drawers and setups

Types of Compatible Cards

Your business may have customers with cards from uncommon credit card companies. One of the most difficult cards to accommodate in the past was American Express. When looking for a payment processor, be familiar with the cards you normally see. The most common are American Express, Discover, MasterCard, and Visa. Being unable to take a payment from your customer’s card means missing out on a sale. Be prepared for anything.

Transparent Pricing

No one enjoys hidden fees. When working towards obtaining a payment processing service, make sure that they are transparent. The more money charged for transactions or monthly fees, the less your business sees. Using the general fees guide above can help you make the right decision.

Customer Service

In order to keep satisfied customers, you must be a satisfied customer yourself. When choosing a payment processor, be sure to check reviews. You want to be able to contact them in a variety of ways should something go wrong. You also want customer service to be responsive to customer complaints. The worst-case scenario is having a customer’s payment go wrong and being unable to help them. Customer insights in the form of reviews and recommendations can help you choose.

Conclusion

It’s important to understand how the process of payments is carried out for your business. Payment processors are a crucial part of any business’s income because they handle all of the technical aspects of taking electronic payments. When selecting a payment processor, understanding their fees, as well as their reputation, is a must so it’s imperative you do your research. 

Depending on the size and nature of your business and your customers’ spending habits, your needs can be met by various payment processors. Look for flexibility, good customer service, a reasonable fee structure, and how seamlessly the service can be added to your accounting system. Any of the 6 on this list would make an excellent choice. 

We have a payments category with more articles just like this. Be sure to take a look for any business information you may need!

FAQs on Payment Processors

Which Payment Gateway is Best in Canada? 

The answer to this is that it depends on your business! One of the largest payment processors in Canada is Moneris. But if your business is smaller, with a non-traditional point-of-sale terminal, a processor like Square is a valid option. Canadian businesses may want to choose a local processor with a full-service menu of accounting options like FreshBooks. You can try their software and support for free here.

What is the Most Common Payment Method in Canada?

Canadians often use credit cards and debit cards that draw funds directly from their bank accounts. The most common credit cards are Visa, Mastercard, AMEX, and Discover.

How Much do Payment Processors Make Per Transaction?

Processing fees for credit card processing range depending on the provider and your chosen plan. Depending on the situation, card, and company, the charges can range from 1.5% to over 4%.   

How do I start My Own Payment Processing?

Start with this list of our top payment processors and do your research to match the service to your company’s needs. If your business accepts card payments, you can start taking payments quickly and easily in person and do business online in just a few business days. 

Which is the Best Payment Gateway for Small Businesses in Canada?

Square is good for businesses whose revenue is under $50,000. Besides that, the answer depends wholly on your business, its needs, and what you want for your own merchant account. Look at our above list and see which one suits you best.

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