Special Requirements of International & Canadian Merchant Accounts

In particular, Canadian merchants suffered from the near-monopoly Canadian chartered banks have on merchant accounts. Merchants seeking a merchant account from their own bank usually find the rates and application fees excessive. Banks also require excessive paperwork and their process can be very time-consuming due to the bureaucracy involved.

Meanwhile, U.S. banks regard foreign merchants as involving significant risk – higher than average chargebacks are too often the case. In addition, U.S. banks recognize that they will have a substantial problem should they need to enforce their legal remedies against international merchants.

So, the few domestic banks who do sell to international merchants often require large security deposits or reserves and other continuing obligations – requirements that the majority of foreign businesses are unwilling or unable to assume.

In the last decade or so, however, the merchant account and credit card processing landscape has been transformed with the introduction of many independent sales organizations (ISO’s) – middlemen who assume much of the risk that banks have been unwilling to take. The result is that it is international businesses now find it significantly less arduous to qualify for a merchant account.

Of necessity, the fees charged to international merchants are higher than those paid by U.S. merchants, with discount rates in the 2.5% to 10% range. Fees are set based upon the country of origin, whether the merchant maintains a U.S. business checking account and U.S. mailing address, as well as the type of business being operated.

Up-front set-up fees are common, as are reserve or deposit requirements.

As regards Canadian merchants, here, courtesy of Moneris and The Transaction Group, are seven questions you should ask any company seeking to sell you a merchant account:

1. Does the merchant account provider make available a wide array of software to meet the needs of your business?
2. Will you be able to process both Canadian and US dollar transactions, for customers in either country?
3. If you plan on switching from your current credit card processing company to a new one, will you be able to make the switch to the latter but still keep your current equipment?
4. Does the provider offer a wide enough selection of point-of-sale equipment to satisfy your business’ particular requirements?
5. Does the provider offer a wide selection of ecommerce capabilities that will function well with the hardware/software they offer?
6. Will it provide the personalized customer support you require?
7. Is it capable of offering all of the above at prices that are competitive?

If you continue to have difficulty locating a merchant account for your Canadian or international business, please check out our Offshore Merchant Accounts and Third Party Processing section.

For information on the credit card processing costs you may incur with your offshore merchant account, see our Fees Discussion.