Digital Payment Processing In Canada – A Guide For Business

Digital Payment

The digital side of Canadian payment processing is growing rapidly, and the number of businesses using it has increased by over 400% in the last five years. This is because there are now more options for Canadians who want to pay for goods and services online.

In Canada, there are a few options for processing money digitally, including credit card processing, direct debit, electronic funds transfers (EFT), and more recently, digital wallets. The most common methods of payment processing in Canada are credit card processing and EFT. 

Digital Payments

Types Of Payments

For credit card processing, businesses can choose from various processors, such as Moneris, TD Merchant Services, and Elavon, and must comply with the Payment Card Industry Data Security Standard (PCI DSS). 

EFT payments can be processed through financial institutions, banks, and credit unions, or third-party payment processors. In recent years, digital wallets such as Apple Pay, Google Pay, and Interac e-Transfer have become increasingly popular in Canada as a secure and convenient option for payment processing.

Better Opportunities For Business

In order to take advantage of this growth opportunity, all businesses need to be able to accept digital payments from Canadian consumers and businesses alike. With a solid understanding of how Canadian payment processing works, you’ll be able to make sure that your business is ready for this opportunity as well.

By offering multiple payment options, you are ensuring that your customers are able to pay on their terms, not just your businesses. Digital wallets offer convenience, credit cards offer security, and Interac payments offer speed and transparency.

Payment Networks Explained

When someone pays for something using a credit card in Canada or anywhere else in the world, that transaction goes through an electronic network called a “card network” (also known as an “acquiring bank”). The card network acts as an intermediary between the merchant’s bank account and the credit card issuing bank that has issued the customer’s credit card. This allows the merchant to receive funds from their customers’ purchases immediately instead of waiting weeks or even months for checks or cash payments to clear before they can be deposited into their accounts by their banks. 

When you swipe your credit card at the cash register, it creates a unique transaction number that is sent to the card network. The card network then forwards this information to your bank’s acquiring bank. Your bank’s acquiring bank then sends an electronic request for authorization of payment from your credit card issuing bank. This takes place within seconds, although it may take up to 24 hours for funds to be transferred between banks and appear in your account balance.

Third-Party Payment Processors

Third-party payment processors are companies that provide payment services to businesses on behalf of financial institutions. They can offer single or multiple payment options including credit card processing, electronic funds transfer (EFT), and direct debit processing. Third-party payment processors handle the complex and technical aspects of payment processing, allowing businesses to focus on their core operations.

Some common third-party payment processors in Canada include Square, VoPay & Stripe. These companies typically offer a variety of pricing plans, including monthly fees, transaction fees, and chargeback fees, to help businesses of all sizes manage their payment processing needs.

Third-party payment processors offer a number of benefits, such as faster processing times, lower costs, and increased flexibility, compared to traditional payment processing methods. They also offer a range of security measures to protect against fraud, such as encryption and tokenization, to keep customer data secure.


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