How to Set Up A Canadian Merchant Account

For those operating a business in the United States, it requires a number of steps to apply for and successfully acquire a merchant bank account so that you can use credit cards for sales transactions. Of course, there are many things to keep in mind that will ultimately make the process easy.

Operating a business in Canada, on the other hand, is not the same as running and owning one in the United States. Since Canada and the U.S are two distinct countries, their laws are different, just as setting up a business is different for each one.
The same, only different

If you live in Canada and you would like to start a business, there are some things that you must be aware of in order to keep it running smoothly. First, of course, you will need merchant bank account. Since the vast majority of sales transactions are paid with credit cards, this account is something you must set up right away. As with setting up other aspects and operations of a business, there are rules that you must follow in order to successfully get a merchant account in Canada.

First of all, merchant account providers always like to know what type of products or services your business is ultimately selling to the public. There are several things that banks are not usually willing to take a risk on. Since the banks do not wish to lose money, they need to make sure what you sell or provide has not been denied previously. If there is a record of the denial, of course, it is very unlikely that you will successfully open an account.

It is best to inform the banks about the nature of your business prior to applying for a Canadian merchant account. Each bank is different as far as what products and services they accept and will not accept. This is because some of these products and services are much riskier than others, such as intangibles like subscription or online services. Each bank will be able to supply you with information regarding their policies.

In Canada, every transaction that is conducted online is considered to be high risk. That is the way the Canadian banks operate. To counter this risk, most merchant account providers in Canada require a set-up fee that is non-refundable. These fees can be in the hundreds of dollars or more, depending on the particular provider and your particular package of services. As a prospective merchant, you should seek alternatives in the event that this does not work for you or your business. If you conduct business in physical locations, too, you should inform the account providers and banks as to the proportion of sales done in the riskier, online space.

Application Ins and Outs
Next, in the application process, you should provide the Canadian merchant account provider with enough information about you and your operations for them to base their decision on. Omissions of details can cause your merchant account to be denied.

There are a several products and services the vast majority of Canadian banks will not approve, including digital downloads

, online medical prescriptions

, money or wire services

, and third-party provider systems.
Unlike the risk associated in the United States with such items as tourism

, computers, software

, jewelry

, auctions

 and electronics, almost all Canadian banks will be happy to do business with merchants who sell these items.

Deposits Enhance Security
Since the Canadian banks do wish to engage in business and not make too many denials, they will often require a security deposit from merchants that sell riskier items. Canadian banks also have the right to charge merchants higher rates for their specific risks, which makes sense. If your business should happen to falter, the provider and/or bank would still have its security deposit.

The application process for a Canadian merchant account is relatively straightforward as it is with U.S. banks. Merchants fill an application and pay the initial set-up fee. Then, once the application is submitted, the merchant account agreement is generated almost immediately. Most approvals take one to two business weeks. For those merchants who also conduct business online, gateway services will be established so that you can easily accept credit cards online.