

How the Payment Processing Industry in Canada is Halting Innovation - kerryfalk
http://partners.styckyd.com/partners/blogs/19-how-the-payment-processing-industry-in-canada-is-halting-innovation

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seanmccann
Processing credit cards in Canada can be a nightmare compared to options for
US companies. The fees are much higher, account setup can be complicated, the
APIs are brutal, and there are crazy limitations like Canadian companies not
being able to process AmEx in US dollars.

The best option for Canadian based companies is to incorporate a child LLC in
the US to use US based payment providers. Between Stripe, Braintree, and
FeeFighters you'll be very happy.

You'll definitely want to check with tax experts before doing this.

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kerryfalk
This is exactly what we have had to do, Sean. The company has been
incorporated and I'm waiting to finish the paperwork with the bank so that the
US company has a bank account and we can begin process payments.

I find it unfortunate that this is the case though. I used to believe that it
was due to regulatory differences of Canada vs. the USA but I don't believe
that's the case.

Again, I'm not an expert this is all just based on my experience but the
regulations for opening an account in the US are far more detailed than they
are in Canada. The issue in Canada just seems to be that there is not enough
competition. The banks in control of the payment processing industry are
really large institutions, they're not hungry to gain ground by looking for
new ways to do business.

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gamble
It cuts both ways. In the past, the smaller number of Canadian banks made it
easier for them to push common payment projects, albeit ones that don't
challenge their business model.

For example, debit cards were in common use in Canada at least ten years
before they started to appear in the US. I would visit the US in the late 90s,
and it always struck me as anachronistic how many people were still paying for
everyday purchases with checks. I doubt any Canadian store has accepted
personal checks in more than a decade. It hasn't been until recently that
Americans seemed to catch up with Canada in debit card use.

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suking
10 years ahead on debit cards, 70 years ahead on medical coverage.

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alexlinebrink
Hey all - this is definitely a huge issue for forward thinking tech/payment
start-ups.

I work with a lot of tech start-ups to help them get around these issues. I
know the acquiring side pretty well, and would love to chat with anyone who is
interested in doing the aggregator model. So far, I've helped a few people
find workarounds to avoid aggregator status, and if that isn't possible, I
might be able to help you on the way to becoming an aggregator. Give me a
yell! alex (at) coremerchant (dot) com .

Happy to offer advice and help you brain-storm free of charge. Cheers!

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fitzandsullivan
@Kareem, that is the most ignorant post on this topic. You clearly have no
clue about what you're talking about. Payfirma's app is 2 pages and the
merchant owns the account. Square is like Paypal, they aggregate on the
merchant's behalf meaning they hold your funds and can cut the merchant off
anytime.

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chad_oliver
Please, no personal attacks. Rather than bashing a person, respectfully show
them why they are wrong.

Also, you may not have seen that under each person's comment is a small
'reply' button. Click on that to start a reply to someone - it's better than
@username for organising the discussion.

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thinkcomp
I think in general, between my experience in the United States and this
article about Canada, it's clear that banks are against technological
innovation across the board because they are absolutely terrified of being
disintermediated completely. And rightly so. The ends of retail banking and
plastic cards as we know them are perhaps a few years off (see
<http://www.aarongreenspan.com/writing/essay.html?id=48>), and they will do
anything they can to stall that day from arriving.

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wavephorm
Most industries in Canada are protected against innovation and competition by
a series of public cartels and legislated monopolies that have been erected
over decades. Telecom, Banking, Tobacco, Grain, Lumber... and at the
provincial level Energy and Alcohol are all carefully protected. Essentially
the entire country is a giant syndicate under the guise of free trade.

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InclinedPlane
Don't forget Canada Poste.

E-commerce is significantly stunted in Canada due largely to excessive
government protection of monopolies.

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plam
there's a Square clone in Canada already --
[http://www.payfirma.com/solutions/mobile_solutions/iphone_mo...](http://www.payfirma.com/solutions/mobile_solutions/iphone_mobile_payment-
app)

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simonk
With square, you are not setting up your own merchant account you just go and
signup on squareup.com and get the reader on your phone.

Payfirma you still have to talk to someone and get an account signed up, pay
monthly fees, setup fees.

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Sniffnoy
Links in post are broken due to bad quotes.

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kerryfalk
Thanks. Rookie mistake. Fixed.

