As Canadian consultants, it is fact of life for our main income to come from the US. Of course, there are many ways that our US clients can use to pay for our services/products (but, as you can see from the below, the only ideal way to get money is through Interac E-Transfer, which is still not available between the US and Canada):

Wire Transfer

Our American customers can pay us by wire transfer, which is a fast and efficient way to receive money, but can be inconvenient.

Advantages of using wire transfer as a payment method

• The money will be received within 24 business hours to our bank account.
• It is very reliable.
• There are no chargebacks.

Disadvantages of using wire transfer as a payment method

• The sender will incur a relatively hefty fee, which is at least $15. That’s why smaller US customers may not accept to send us money by wire transfer.
• It is inconvenient as the sender may have to make a physical trip to the bank to send us the money (business accounts can wire money using online banking).
• We need to give our full bank information to our customers.
• We are dinged a processing fee when we receive the money. This fee is about $5 + a commission fee based on the total amount of the transfer.

Credit Card

Almost all Americans (as well as Canadians) have credit cards, and they can pay us by credit card by using a credit card payment processor such as 2checkout. This is a very convenient way of accepting money but we do incur a lot of fees.

Advantages of accepting credit cards as a payment method

• The money will be received in our account instantly.
• It is very convenient for our customers as they all have credit cards.
• Our customers are not charged a fee for paying us using a credit card.

Disadvantages of accepting credit cards as a payment method

• We are exposed to chargebacks.
• We incur a lot of fees for accepting credit card payments, usually around 30 cents a transaction + anywhere between 2.2% and 3% of the total order.
• We may need to move the money from our account with the payment processor to our bank, and we may incur a transfer fee when we do that.

PayPal

PayPal, as they say, is the most loved way of paying and getting paid. What’s nice about it is that you get paid instantly, but the negative when it comes to PayPal payments is that you are skinned alive on commission (and other) fees.

Advantages of receiving money through PayPal

• The money will be received instantly on our end.
• No one has a problem paying on PayPal. It is probably the most trusted way to make payments on the internet.
• Our customers are not charged a fee at all.

Disadvantages of receiving money through PayPal

• The commission rate is 2.9% + 30 cents a transaction.
• We are skinned alive on exchange rates, and as a Canadian, you are forced to exchange money from one currency to the other since they force you to link your account to a Canadian account in Canadian currency. So, let’s say you are receiving $300 from someone in the US, the money received to your account after the fees is $291. Now, when you want to transfer money to your bank account, you will incur a crazy exchange rate, which is usually 3% higher than the current exchange rate. So, the USD $291 will be exchanged to CAD $288 even though the current USD/CAD exchange rate is 1.02 (each USD $1 buys you CAD $1.02).
• We have to pay 50 cents to transfer money that is less than $150 to our bank account.
• We are still not protected against chargebacks (although PayPal does fight the chargeback on our behalf).

Checks

The good old checks! We all love to receive a check, even though we still have to make a trip to the bank to deposit it. The nice thing about it is that there are no fees for depositing checks, but on the flip side, we need to wait for it to arrive by mail and it can bounce!

Advantages of getting paid by checks

• No fees on the sender or on the receiver. The only fee to be paid is the postage to send the check.
• The money may be deposited immediately into your account.
• The money can be in any currency.

Disadvantages of getting paid by checks

• A check may bounce, and when it does, you are charged an NSF fee of at least $20. (not to mention that you won’t get paid the original amount)
• Checks may be lost in the email – or better yet – you may get a customer who claims that he sent the check while he didn’t really send it.
• The bank may hold the check for 10 business days until it clears (although we all know that a US check clears within 24 business hours).

Now, there must be a better method for our clients to pay us, a method where we receive the money instantly and we don’t incur any fees. Well, such a method exists, but unfortunately, and until this very moment, it is only restricted to our Canadian customers (who are clients of the Big 5 Banks: BMO, CIBC, RBC, Scotia, and TD). This method is called Interac E-Transfer (it was formerly called Interac Email Transfer).

The only disadvantage of Interac Email Transfer is that it cannot be used to send money from the US to Canada (and vice versa).

The advantages are many, including:

• Very low fees. The only fee paid is by the sender, and it is merely $1.50, regardless of the total amount.
• Super fast and convenient. It takes 2 minutes to send the money and about 30 minutes for the order to be “processed” and “accepted”, and once it is, the receiver will get an email containing a link to claim his money. Once the link is clicked, the receiver will be prompted for a password (which is supposedly communicated to him by the sender). Now after the password is successfully entered (the receiver has 3 chances before the transfer is blocked), the receiver will be asked to choose an account where to place his money, and voila, the money is there!
• No chargebacks, no bounces, nothing! Once the money is in your account, it’s in your account!

Now the question, when are we going to get this kind of flexibility in transferring money between the two countries that are each other’s largest trade partners? When are we getting Interac E-Transfer between the US and Canada? I personally don’t think we’re ever going to have it, not because of the logistics involved to implement such a system (I’m sure it’s very easy to do), but because such a system of transferring money (which is better and safer than sending actual cash) will kill all the above ways of making payments!

Interac E-Transfer between the US and Canada is a far fetched dream, and it will remain a dream, at least for the foreseeable future!

This article (as well as all other articles on this website) is an intellectual property and copyright of Fadi El-Eter and can only appear on fadi.el-eter.com.