Payment gateways are the technologies that serve as a gatekeeper between a customer’s financial institution and a merchant’s store. Payment gateways are responsible for securely and conveniently saving customers time by transferring their payment details to the merchant’s point of sale register in order to ensure that the payment can be cleared verifiably.
This is how payment gateways operate regardless of whether the payment in question is being made online or as part of an in-store retail purchase.
Payment gateways are not to be confused with payment processors, which are responsible to transmit the information, transfer the funds, and engage in the settlement and reporting procedures between a customer and its merchant of a transaction.
Essentially, payment gateways serve in the role of the gatekeepers between merchants and financial transaction networks.
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How do payment gateways work?
When a customer goes to make a purchase from a merchant, the customer will enter their security details into the merchant’s website or point-of-sale terminal, along with the details of the purchase.
The payment gateway then is responsible for encrypting that information and sending it to the merchant’s bank. Upon authorization it then forwards that information to the customer’s bank for approval. That is dependent upon whether there are funds available in the customer’s account and other security checks.
If the transaction gets approved, the payment gateway sends a notification back to the merchant’s store and the customer will receive a notification as to the transaction’s status. From there, the merchant’s payment processor will handle the payments and facilitate the transfer of the funds from the customer’s account.
How to choose an online payment gateway provider in Canada
There are several factors that you must consider when choosing the best payment gateway.
Among these criteria include:
- Pricing structure and transaction fees
- Payment methods supported
- Data security
- Integrations
- ReliabilityÂ
- Customer satisfaction
Making the right decision as to which payment gateway to choose will depend largely on the specific needs of your business.
Take for example the case of online casinos. They have become very popular in recent years. Much of these gains have been the result of improvements in online security and payments gateways. This is because it is important for customers to know their funds are safe and secure when making deposits to these types of businesses.
Interac casinos in particular are leading the way in terms of security. Interac is a well-known digital payment system that allows you to send money directly from your personal bank account to online casinos. It offers fast withdrawals, enhanced security and convenient money management and is specifically designed for Canadian players. If you have any questions about making deposits to casino sites, you can read CasinoCanada’ guide to Interac-friendly gaming sites, which discusses these issues in more detail.
In the case of many businesses however, there is going to be some degree of trade-off between these different factors. No two payments solutions are exactly the same. Each provider will come to the table with an offering that has its own set of advantages and disadvantages.
Keep reading to learn more about what details to consider when evaluating each of these factors. In addition, we have provided a comparative review of five of the top payment gateways in Canada.
Payment processing fees
Understanding how a payment gateway has created its fee structure is an important consideration when choosing a payment gateway.
While most payment gateways in Canada use transparent pricing methods, they will charge users different rates depending upon the type of transaction that is taking place. For example, transaction fees may change whether a purchase is being made online or in-person.
Many providers use a pricing structure that takes a transaction fee as a percentage of the dollar value being charged, in addition to a flat fee, per transaction.
Those considering which payment gateway is best suited for them should be aware and pay close attention to which payment methods they conduct most of their business transactions in, and any monthly fees as a surcharge, in addition to credit card fees, and processing fees.
Payment Methods
An increasing number of Canadians have been moving away from cash-based payments in favor of card-based payments and digital transfers in recent years, as the graphic below shows.
Source: Payments Canada. “Canadian Payment Methods and Trends Report 2024.” CANADIAN PAYMENT METHODS AND TRENDS REPORT 2024
Along with this changing trend, the market for payments has witnessed tremendous growth in the demand for gateways that can accept multiple payment options.
Providers that can accept a variety of payment types including debit cards, credit cards, and local payment methods, in addition to emergent digital payment solutions such as PayPal and Stripe, are the favorites among many small businesses, and able to charge a higher pricing premium for their services.
Security
One of the biggest challenges faced by businesses when considering switching to a new payment gateway is the issue of privacy. The payment information that is encrypted as part of a transaction is important and in the payment card industry data security remains paramount.
“Whilst usability is key for payments, security is a necessary condition for people to use them.” – Peng Ning, VP Engineering, Samsung.
The best payment gateways offer the latest in technologies in order to secure and handle their customers important and sensitive transaction details.
Integrations
These days, if you want to stand out amongst the competition as the best payment gateway in Canada, the level of integrations that you can offer is important to winning new merchant accounts.
The top payment gateways offer additional payment services including such features as:
- Invoicing
- Billing
- Mobile apps
- Digital wallets
- Third-party integrations
With an increasing amount of payments taking place online, many small businesses are looking for a payments solution that can serve as a full-service payment gateway to handle their online stores and in-person shopping experience.
Reliability
For many businesses, being a reliable payment gateway means being dependable and staying online even when transaction volumes are at peak levels. Major payment processors today are capable of managing tens of thousands of credit card payments per second at payment terminals operating all over the globe.
Leading payments solutions in Canada are using the best and latest in payment technology in order to make sure that their customers can stay online and handle large volumes of online transactions at any given moment.
Customer Experience
When it comes to delivering the best shopping experience, customers want a solution that makes it easy for them to check-out for transactions taking place online and in-person.
Merchants that offer various payment types including mobile payments for their online store or online business and include credit cards that are widely accepted across different destinations will go a long way to ensure there won’t be any last minute declines taking place at the checkout aisle.
The 5 best Canadian payment gateways
Square: a simple and cost-effective solution for digital payments
Square today has become one of the most well-known alternative payment systems. With more than 4 million customers globally, it is one of the leading payment processors in Canada in addition to being a leading payment gateway service internationally.
Among its list of top features is the Square Reader, a card reader that can attach to your phone or tablet and allow users to make payments in person using their credit or debit cards.
Stripe: a developer-friendly platform for integration
Stripe is a leading payments processor among online retailers and also one of the top payment gateways in Canada. Although its transaction fees are slightly higher than some of its competitors, at a fee of 2.9 % plus a flat fee for online transactions, Stripe has made it clear that it wants to become the payment gateway for your online business.
Look no further for this than Stripe’s ability to feature third-party payment integrations with such popular e-commerce platforms as WooCommerce, Magento and Shopify, helping to make online purchases easier and more convenient for online shoppers.
Moneris: the market leader in payment processing for small and medium-sized businesses
Moneris is one of the world’s largest payment platforms, and a payment processor also, with a payment gateway handling over 3 billion online payments per year. It is popular among businesses in Canada. Its ability to reliably handle such large transaction volumes has made it a consistent favorite among business owners.
It also happens to offer some of the lowest credit card processing fees amongst its competition in Canada, at just 2.7% per in-person transaction plus a 10 cent flat fee.
PayPal: the renowned ruler of the online payments marketplace
PayPal has fast become one of the world’s leading alternative payment methods and currently holds the top market share in Canada among payment gateway providers, as shown in the table below.
PayPal has in particular excelled as a provider for using digital payments across borders with global reach that currently supports over 200 markets in more than 25 global currencies.
“The good news is that the technology platforms exist to create regional and global financial systems that are fair, safe, and universally accessible.” – Dan Schulman, president and CEO of PayPal
Elavon: one of the top five global payment providers
Elavon is a well-known payment processor and one of the largest merchant payment processors in the United States and globally with over 1.3 business accounts in over 30 countries. It is well known for being able to handle large transaction volumes, with more than 3 billion transactions taking place on its networks each year.
In addition, terminals at point of sale provided by Elavon can accept payments from any card in the world and are capable of processing foreign currencies. Businesses thinking to use
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Whether she is researching the latest trends in home decor, life-changing destination getaways, or the best way to maintain your finances, Dewey takes pride in leaving no stone unturned. She is passionate about distilling and delivering high-quality information that you can use to upgrade your life.
