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Accepting Canadian Payments

Anecdotal stories abound from Canadian cross-border shoppers being asked by the shipper to pay anything from a nominal amount up to the full cost or more of their pur- chase in customs and duties fees (on top of the amount already paid for the purchase to the merchant) when their order is delivered to their door. The sticker shock has resulted in many deliveries being returned and the Canadian shopper hesitating to make any further online cross-border purchases due to the negative experience.

Calculating the required Canadian customs and duties can be quite complex so you may want to use a third-party that specializes in these areas. Many fulfillment, logistics and shipping firms also include this as one of the many services they offer to retailers. For more information on exporting goods into Canada, a good place to start is by reviewing Chapter 7: Customs Laws and Procedures and visiting the Canada Border Services Agency website at www.cbsa-asfc.gc.ca/import/menu-eng.html. Chapter 6 also provides a list of some of the International checkout vendors.

Third parties can also calculate the appropriate Canadian federal and provincial/territo- rial goods and services taxes that need to be applied to U.S. purchases depending on where the Canadian consumer resides. If you decide to do this internally, it is important to note that there are different provincial/territorial rates in addition to the government goods and services tax. And some provinces/territories have or are moving towards a harmonized sales tax (HST) between the two. More information on these can be found at the end of this chapter.

The cost of shipping is another factor in the Canadian consumer’s decision-making process when conducting a cross-border purchase. Canadians understand that ship- ping will be an additional amount to their purchase, but expect it to be reasonable. Mark-ups on the shipping should be avoided as high shipping costs can result in online purchases being abandoned.

If a third-party vendor is used, it’s always best to clearly indicate this on your website and explain the nature of the relationship, (i.e., whether the vendor takes care of every- thing on your behalf or handles only the shipping and returns), as this will determine whether the Canadian consumer makes one payment in full to you the retailer or if another payment is required to the vendor for shipping across the border.

There are different processing fees associated with accepting international payments. While continuing with your local acquirer/processing relationship helps to keep opera- tions simple by not having to set up shop in each and every country, it may involve other fees. Your payment services provider can outline these in more detail for you. The po- tential for obtaining new customers and additional sales ongoing can far outweigh the costs of conducting business internationally.

Visa e-commerce cross-border handbook for U.S. retailers

Copyright 2010 Visa. All rights reserved.


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