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Accepting Credit Cards — Comparing the U.S. and Canada

When it comes to accepting credit cards, U.S. and Canadian merchants enjoy relatively similar experiences: 

  • Both markets adhere to PCI-compliant security standards. 
  • Setting up merchant accounts is fairly straightforward. 
  • Most shoppers rely on one or several of the major credit card brands — i.e. Visa, MasterCard, American Express and Discover.

Yet despite these similarities, there are a few key differences. As a Canadian merchant, it is important that you know what to expect as you begin accepting credit and debit cards within your payment environment.

1.  One More Logo to Consider

The majority of American debit cards come branded with one of the major credit card names (in addition to the bank's name). In Canada, however, most banking cards come with the Interac logo, which may or may not be paired with Visa. Therefore, whether you run a traditional brick-and-mortar shop or an e-commerce store, you'll need to include the Interac decal on your window or shopping cart respectively.

2.  Expect to Pay Higher Fees

In both the U.S. and Canada, there are a number of fees associated with setting up and maintaining merchant accounts. If you have an online store, you'll also have payment gateway charges.

Canadian merchants, however, tend to pay higher fees across the board. This is because there are fewer merchant account providers throughout the country — at least compared to the U.S.  With less competition, processors don't have as much incentive to lower their rates.

Typical charges include things like:

  • Termination fees
  • PCI compliance fees
  • Minimum monthly fees

These higher charges also apply to your customers; they'll often receive fewer rewards and pay higher interest rates. Most Canadian cards also include foreign transaction fees when shopping abroad. Stateside card issuers have begun phasing out these 2.5 to 3 percent charges due to public pressure and increased competition.

3.  EMV Compliance Isn’t Really Optional

EMVs are chip-enabled credit cards that offer much greater security when shopping in traditional brick-and-mortar establishments. They have already become the standard in most parts of the world. In nearly every major market that has adopted EMVs, fraudulent losses have gone down.

From 2009 to 2012, for example, Canada witnessed debit card skimming go from $142 million to less than $40 million. This 73 percent decrease was directly tied to the introduction of EMVs as the official payment standard within the country.

EMVs are still optional in the U.S, but in October 2015, new liability rules are going into effect. Whichever side of a retail transaction that isn’t EMV-ready becomes responsible for any fraudulent losses that might occur:

  • If the merchant has an EMV terminal and the shopper doesn't have a chip-enabled card, the credit card issuer covers any losses.
  • If the merchant has a legacy terminal and the customer uses an EMV card, the merchant must cover any fraudulent losses.

Canada has had similar liability laws in place for several years now, and nearly 90 percent of merchants have made the switch already. Although upgrading isn't officially mandatory, failure to make your payment infrastructure EMV-ready will likely cost more — either directly or indirectly.

To learn more about accepting credit cards throughout Canada, contact us today for a free consultation.

Topics: EMV

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