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Canada EFT Processing

2024 Guide

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What is Canada EFT?

Canadian Electronic Funds Transfer (Canada EFT Processing) provides a convenient and cost-effective solution for managing Canadian ACH or e-check transactions. Canadian EFT processing or Canada ACH Processing allows Canadian-based businesses the ability to debit checking accounts for one-time or recurring payments. It is important to note that in contrast to credit cards, cross border payments are not available, meaning funds are collected and settled in the same denomination. So a US company looking to debit Canada customer’s would need a Canadian bank account to settle funds into.  

Why is Canada EFT Processing Necessary?

In the US there are many providers that offer an ACH processing solution. For EFT Processing in Canada your options are much more limited as a handful of banks control the payments ecosystem. It can often be difficult to gain access to the Canada EFT processing capabilities. By partnering with Agile Payments you can leverage an easy to implement solution to debit or credit Canadian bank accounts electronically. This dramatically reduces time and money spent on payment collection. EFT Canada

U.S. ACH Processing vs. Canada EFT

Integrating Canada EFT Processing or Canada ACH processing as a stand alone or in conjunction with US ACH processing offers SaaS platforms a way to automate the payment collection and reconciliation process.  A single system to manage both U.S. and Canadian e-check transactions and reporting data for reconciliation can be a powerful customer acquisition tools as well as a payment revenue generator. For SaaS platforms initiating recurring payments or one-time payments from your application you make your end users business life more efficient and profitable as well as make your app more valuable. Key Benefits and Features of our Electronic Funds Transfer Canada Platform:
  • Manage cash flow more efficiently and improve forecasting. Knowing your business has reliable predictable cash flow makes planning much simpler and much less stressful.
  • Reduce operating expenses associated with collecting/ writing cheques, manual processing, and time spent reconciling accounts. Ask someone working in the collections process how much fun it is to call people asking for payment.
  • Accelerate your payables process and control the timing of credits/debits to your account. Again business planning becomes much simpler.
  • Receive notification of rejected payments. Many times, and especially if working with a bank’s Canadian EFT tools, you are forced to manually deal with payment rejects. Often these can take a week or more to receive notification on.
  • Reduce lost and stolen cheques. By moving money electronically you reduce risk of paper cheques being lost or stolen.
  • Mitigate the risks associated with cheque fraud and forgery. Again risk is reduced and mitigated with fewer paper cheques.
  • Preserve the autonomy of your business units while ensuring centralized concentration and control of funds. Automation and systems are the key to scalable growth. An automated Canadian EFT solution is a big step in business growth
  • Reduce employee and  bank service charges. Making bank trips and paying per check fees are both bottom line drags on your business. A Canada ACH solution automated these tedious manual involved tasks.
  • The ability to tie EFT transactions to a deposit sum for easy reconciliation. Read about EFT Deposit Reconciliation.
For SaaS platforms, Canadian ACH Integration offers a pathway to create a more useful and sticky end-user solution as well as generate new revenue streams.

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The On-Boarding Process for an Organization Seeking Electronic Funds Transfer Canada | Canadian EFT Integration

For many organizations the on-boarding process is extremely important. To simply have an ACH integration option may not be enough. Many organizations prefer for the on-boarding process to be a “white label” process, where the third party ACH processor remains in the background. This means the EFT integration must provide a way for the organization to pass their merchant’s data that is required by the EFT or ACH processor’s underwriting department – ideally with everything in electronic format, including signatures. This means the  Electronic Funds Transfer Canada  API must provide the ability for the application and underwriting process to be presented on their website, as though the ACH payments solution is coming from them, pass the underwriting data to the processor, notify the parties involved where the application stands and pass API credentials to the applicant user once the merchant application has been approved and enrolled. In some cases the credentials are passed to the merchant themselves in the case a SaaS application requires the merchant user to enter API credentials themselves, and in other cases the API credentials are passed to the SaaS organization for entry oh behalf of the merchant. It all depends on the Canadian ACH integration path that the SaaS organization chose.    

Case Study:

A large Winnipeg based security/alarm dealer in the medical alert field transitioned to a business management platform with an integrated payment solution.
An Canadian EFT payment solution was mandatory as it offers both reliable and economical payment processing as well as significantly lower payment decline rates compared to credit cards.
By leveraging the AgilePayments Canadian Electronic Funds Transfer API the business has been able to significantly reduce time and expense spent on payment collection and reconciliation.

What Should one Look for in an Electronic Funds Transfer Canada Integration API?

  • API availability: Does the partner offer RESTful, SOAP  Canadian EFT transaction integration or both?
  • What other payment utilities are available?
  • If your market base includes Canada, does the partner provide a single API for both US ACH and Canadian EFT?
  • ACH Integration–The Missing piece?
  • Is sensitive data tokenized and can a call be made to immediately tokenize the bank account data prior to an origination?
  • Are there opportunities to leverage the Canadian EFT Processing Integration for your apps’s revenue stream?
  • Are there ancillary utilities available from the ACH API to make calls for anti-fraud and risk mitigation?
  • Does the partner provide assistance in ACH payments processing adoption for you and your user clients? Simply offering a payment method is not enough to get end user adoption.
  • Are there risk acceptance models available that could lower processing costs?
  • Are there white label possibilities that might allow for a branded processing option, keeping the ACH processor behind the scene?
  • Is there an API that would allow your customers to apply from your site or app?
  • Will your potential partner take the time to understand your business requirements and provide options that custom fit the payments needs to your needs and your clients?
  • How long has your potential integration partner been serving the needs of app providers and what is their track record?
That’s just a start at some of the common questions you might ask. With Agile Payments, we take the time to learn your business requirements and needs first. We have ACH app clients in sectors that span a wide spectrum. In every case we have become a valuable and trusted partner to these providers–to the point where we help in other business areas [eg client acquisition strategies] For some organizations where easy onboarding is paramount and the goal is to have clients enrolled and processing payments thoughts should be given to Canadian Payment Aggregation or Canadian Payment Facilitation [PayFac]. A Payment Aggregator or Facilitator [Payfac] can be thought of as being a Master Merchant-facilitating credit and debit card transactions for sub-merchants within their payment ecosystem. Becoming a PSP [Payment Service Provider] lends itself well to some businesses that fall into the software provider classification. Some well known payment aggregators or Payment Service Providers [PSP’s] are PayPal, Stripe and Square.  

Advantages to the Canadian Payment Facilitator Model

Speed of boarding process: Being a Canadian Payment Facilitator allows you the ability to setup sub-merchants very quickly, removing a choke point to new client acquisition.
  • Customers love that it is so easy to get the account going with no paperwork or documentation burdens. This dramatically improves the client boarding process.
  • Payment aggregation as business model
  • Buy a Square reader at Walgreens, go online and create your account and within 30 minutes you can be swiping payments. That’s a very attractive acquisition tool.
  • Merchant Control: Sub-merchants are under contract with you, the Master Merchant.
  • Flat fee structure: Easy to understand flat fees for your merchant customers. No needs to understand interchange tables.
  • Earnings: Master merchants are able to earn money from network and transactional fees, and potentially float. This is the big one for most SaaS platforms contemplating going the aggregation route. FinTech has seen massive investment and the main attraction is recurring revenue. As long as people are taking payments revenue + profit is being generated. Think about a regular business selling widgets. Unless those widgets are razor blades the purchase frequency can be months or years. Contrast that with a business taking payments. You can see the allure of the payments business and why SaaS platforms look at Canadian payment aggregation.
Revenue is derived from the difference in buy rate from the processing networks and the sell rate charged to the end customer. For illustration, if a Payment Facilitator knows their true overall cost amounts to 2.4% of processed volume and they sell at 2.9% their margin is .5% of dollars processed. If they process $10,000,000 per day that works out to $50,000 in revenue per day. Very attractive business model and you might say sign me up. There are of course downsides. These include integration and compliance costs as well as risk mitigation. If you are interested in learning more about Canadian Payment Aggregation contact us.  

Additional Resources on Canada EFT

Typical Canadian Bank Limitations

As previously mentioned, that Canadian banking ecosystem is tightly controlled, and while some companies have enough clout and credit-worthiness to be allowed to process EFT transactions through their banking partner, the communication systems and processes that Canadian banks provide are extremely limited. Almost always this means a batch file specification for sending and receiving reporting data. In many cases the Canadian bank will refer the originating client to use a third party software that is PC based that is not well supported. Being PC based, this option opens up a number of security concerns for the originating client. To the contrary, provides API integration communication with the ability to employ webhooks that can automate the reporting process.  All stages of the transactions originated can be updated to the originating client’s software platform in near real-time.

Canada EFT Partnerships for ISV’s

Here at Agile Payments we listen to each SaaS ISV’s needs and try to come up with the solution that best meets the needs for a given ISV’s needs. In many cases the solution amounts to a Payments Partnership for Canadian EFT processing. The partnership can include a white label experience for the application and onboarding experience, yet leave the ISV aside for having any processing risks. Another key area for potential EFT partnerships is revenue share. We try to arrange for a profitable revenue share by creating a buy rate that an ISV can’t typically acquire and share equally is revenues.
  • How long does an EFT transaction take to settle?
    Under a standard Canadian EFT merchant service agreement, transactions are settled on a four business day hold. This is because a notification of return can be received up to four business days after origination. Under certain circumstances the hold time can be reduced, but this presents the potential for late returns and reconciliation issues. Check with the Agile Payments team for advice on your particular use case.
  • What is the cost of a Canadian EFT merchant account?
    Pricing can vary depending on the use case, transaction amounts, transaction volume and the funding requirements. Check witht he Agile Payments team for pricing for your particular use case.
  • Does your Canadian EFT service have an API?
    Absolutely! The API supports both Canadian EFT and USA ACH, as well as credit card transactions.

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