Thought Leadership

Payment Solutions for Canadian Entrepreneurs

Unlock the secrets to streamlined payments for Canadian small businesses! Explore payment options, expert insights, and cost-effective strategies in our comprehensive guide. Join Fuse Financial for hassle-free invoicing with transparent pricing.

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Mastering payments is crucial for small businesses in Canada. It's not just about getting paid quickly, but also making it super easy for your customers. Increasing cash flow is the lifeblood of a business while making transactions easier for customers has shown to have a direct positive impact on business revenue. In this guide, we'll explore the world of payments and give you practical advice. 

Today, small Canadian businesses have many payment options, from old-fashioned cash and cheques to new digital methods. It can be confusing to choose the right ones. In this blog, we'll share insights from experts like Aamna Zia from Fuse Financial, Chris Farmer from Clearly Payments, and Pamela Draper from the Digital Commerce Group, who spoke at our webinar. Our goal is to help you make smart payment decisions for your small Canadian business. 

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Exploring Payment Options available in the Canadian finance ecosystem 

1. Cash Payment

Cash is a timeless and universally accepted way to receive payments, but it does come with its own set of challenges for small business owners. It's essential to strike a balance between the simplicity of cash transactions, security, and record-keeping benefits of digital options. While cash may occasionally lead to discounts with certain suppliers, it's important to consider the risks of theft or loss. 

2. Cheques and Paper

Paper cheques, with their security features and physical paper trail, have historically been a reliable means of conducting B2B transactions. However, their continued use is increasingly viewed as outdated due to the time-consuming processing involved, making them less suitable for today's fast-paced business environment. Market researchers estimate the cost of using paper checks to be approximately $10 per check, which is at least 10 times more expensive than digital payments. The increased cost primarily comes from labor and administrative costs. 

3. Debit Cards

Debit cards offer the convenience of digital transactions, enabling businesses to access funds directly from their accounts. They're especially favored in B2C transactions, but small business owners must determine when and how to use debit card payments to meet customer expectations effectively. 

4. Credit Cards

Credit card payments deliver immediate access to funds and streamline financial tracking. Nevertheless, the convenience they offer comes at a cost in the form of processing fees. Small business owners should carefully evaluate whether accepting credit card payments, especially for smaller transactions, makes sense from a cost-benefit perspective. 

5. Wires

Wire transfers are renowned for their swiftness in facilitating money transfers, making them particularly well-suited for high-value or international transactions. However, their relatively higher cost and irreversible nature necessitate careful consideration. Therefore, it's wise to carefully consider whether they're the best option for your specific needs, especially when exploring more affordable alternatives for domestic payments. 

6. E-Transfers

Interac e-Transfers provide a rapid and convenient channel for sending money via email. Their increasing adoption rate among Canadians underscores their popularity. Businesses should actively harness this method to streamline quick and straightforward transactions, thereby aligning with customer preferences and expectations. 

7. Electronic Fund Transfers (EFT)

EFTs present an appealing proposition for businesses due to their cost-effectiveness, enhanced security features, and capability to manage refunds and disputes efficiently. Experts strongly advocate for the inclusion of EFTs in businesses' payment strategies, particularly for handling recurring payments, as they play a pivotal role in ensuring ongoing financial stability. 

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Exploring the Future of Canada's Payment Landscape

The Payment Canada 2022 reports unearthed a surprising revelation: cash, cheques, and personal credit cards still constitute a significant portion of transactions in Canada. Our experts weighed in on the future of these payment methods and how businesses can adapt to shifting trends. 

  • Pamela emphasizes the importance of small businesses adopting digital payment options, highlighting their efficiency and potential for cost savings. The pandemic pushed for digital payment adoption where small business owners had to adapt to a new status quo.   
  • Chris predicts a continued growth trajectory, suggesting that the future of payments is already upon us. He’s had numerous conversations with small business owners looking for digital payment solutions to help their businesses grow. 

Customizing Payment Solutions for Canadian Businesses

Extended payment cycles can pose cash flow challenges for small businesses. Our experts provided actionable steps to expedite payments and customize solutions to align with individual business needs. 

  •  Experts have seen that by giving optionality in payments, their customers have been able to collect invoices faster.  Pamela recommends offering a spectrum of payment options, including EFT, pre-authorized debit, wires, and e-Transfers, to accommodate the diverse preferences of customers. Leveraging technology can significantly expedite payment processing.
  • Chris emphasizes the significance of understanding customer preferences, offering credit card payments as an option, harnessing the potential of recurring payments, and exploring technology-driven solutions like instant funding to bolster cash flow.
  • Digital payments play a pivotal role in collecting invoices faster. Aamna’s advice to business owners looking for financing to solve their cashflow issues is to look to technologies and payment methods that can help collect invoices faster and thus reduce the reliance on small business loans.

Securing Payments and Handling Issues 

Digital payment methods, while highly efficient, can introduce complexities such as delays and disputes. Our experts shared insights into how businesses can securely utilize these methods while effectively addressing concerns like hold periods and chargebacks. 

  • Chargebacks are costly for a business, where a customer essentially can request their funds back not to mention the administrative work that goes into disputing a chargeback. Chris underscores the risk of chargebacks in credit card payments and stresses the paramount importance of partnering with a payment provider that offers robust dispute resolution mechanisms and cutting-edge fraud detection technology. Using a tool like Fuse’s invoicing tool to keep good records essentially makes it easy for businesses to provide meticulous documentation when it's needed.  It’s important to know that businesses can take a few simple steps to decrease the risk of chargebacks
  • Small business owners need to arm themselves with the right information on how each of these payment options works.  Pamela advocates for education on three crucial fronts: understanding payment products, acquiring deep insights into your customer base to detect potentially fraudulent activities, and leveraging technology for proactive fraud prevention. She further recommends partnering with payment service providers well-versed in robust fraud detection methodologies, such as Digital Commerce Payments.
  • There’s always that risk-benefit trade off when it comes to adopting digital payments and some options are more risk free. Aamna sees E-Transfer Request Money as a secure and convenient alternative where businesses can collect instant payments that are non-refutable or can’t be taken back and are as easy for customers as clicking on the “accept request” button.

 

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Improving Customer Experience 

The arduous pursuit of unpaid invoices can consume significant time and resources. Our experts offered pragmatic advice and tools to not only expedite payments but also enhance the overall customer experience. 

  • Chris champions the cause of automation and integration to foster stronger customer relationships.
  • Pamela placed a strong emphasis on establishing a responsive support center where customers can effortlessly seek assistance and promptly receive answers to their inquiries.

Cost-Effective Payment Strategies 

Balancing convenience and cost-effectiveness is an ever-present challenge for businesses. Our experts shared advanced strategies to strike the right equilibrium, optimizing payment methods without overstretching budgets. 

  • Pamela suggests bundled transaction packages to provide businesses with cost certainty and affordability, particularly for e-transfers and EFT transactions. Per transaction, packages are also cost effective at a higher volume of transactions.
  • Chris has been an advocate of transparent pricing models such as membership based pricing and cost-plus pricing (aka interchange plus pricing) along with easy-to-understand language that communicates pricing. He cautions against any pricing approach that labels the costs as discount rates which conveys the false intention of a discount when it’s a cost. All credit card acceptance-related costs are listed on both Fuse Financial and Clearly Payments websites. This makes understanding, comparing, and negotiating fees easier for small business owners.  This is aimed at reducing hidden fees and actively supporting the mission to lower credit card payment costs in Canada.
  • Aamna also highlighted transaction limits and constraints imposed by major banks on small businesses and how those result in higher costs and additional administrative burdens. Fuse Financial is committed to keeping prices for payments transparent and affordable.
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In conclusion, mastering payment strategies is essential for small Canadian businesses to thrive. With deeper insights from industry experts, businesses can adapt to evolving payment landscapes, optimize cash flow, enhance customer experience, and maintain cost-effectiveness. Fuse Financial offers an all-in-one payment solution to simplify payments and help businesses grow.

Join us today for effortless invoicing with transparent pricing. 

 

We have the webinar recording ready for you to watch if you are interested.

 

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