Join millions of Canadians who have already trusted Loans Canada
Apply Now

As a business owner, you may have come across the term payment processing or payment acceptance. But – what is it exactly? Payment processing and acceptance is a service that allows companies to accept debit and credit payments from customers. Unfortunately, accepting these types of payments isn’t as simple as you might think, which is why most businesses, both small and large, choose to work with a payment processing service. Implementing this type of service into your business is by no means a requirement, but it can improve various aspects of your company. 

To learn more about what payment processing is, how to select a service provider and what to consider before implementing a payment processing service, continue reading below. 

What Is Payment Processing?

If you own a business, you’ll need to get paid somehow in order to continue to run your business. Of course, cash, cheque, e-transfers and money orders are one easy way to accept payments. However, when it comes to debit and credit payments, the process becomes more complex. This is where payment processing comes into place.

Businesses most commonly work with other businesses to set up their payment processing services. Generally, the relationship between both companies is seen to be a partnership. A payment processing service can be either a point of sale system, in a physical store or online. The system you choose depends on your business.

How Does A Payment Processor Work?

Payment processing refers to how a company processes a customer’s card information to complete a transaction. Part of the whole process involves encrypting the customer’s personal information and communicating that information from their bank to yours. Here’s what you can expect after you’ve installed your payment processor system: 

  1. Your customer will pay for your service by inserting, swiping and tapping their debit or credit card. If the transaction is performed online, the customer will enter their card details instead.
  2. The transaction information is then sent to your payment processor provider who will then send the details to the customer’s financial institution.
  3. The customer’s financial institution will then authorize or decline the payment transaction by confirming whether the customer has the funds available (debit card) or whether the customer is within their credit limit (credit card).

Is your business incorporated? Learn how to incorporate in Canada.

Does Your Business Need A Payment Processing Service?

In short, no, you do not need a payment processing service to operate a business. That being said, payment processing services can be a convenient way for customers to pay, especially in this day and age where people do not use cash or cheques commonly. Instead, cards are the dominant form of payment. 

The last thing you want is for customers to turn away from your business because you don’t accept debit or credit purchases. Although, it all depends on the nature of your business and your clientele. If you don’t need to spend the money on this service, then don’t.

To help you determine whether a payment processing service is right for your business or not, below are some questions to ask yourself. 

  • What is the cost of the payment processing service you’re interested in? And does the cost fit into your budget?
  • Does your business require debit, credit, and other digital payment methods (for example, online businesses) to operate? 
  • Will adding a payment processing service to your company expand your business?
  • Have customers frequently requested debit and credit payments?

Learn how you can access extra working capital?

How To Choose The Right Payment Processing Partner

They are called payment processing partners for a reason, you are meant to mutually benefit each other. Your relationship with this partner could be long-standing, so it’s worth your while to take some time to consider who is the best option for your business. Below are several factors to consider when determining who your payment processing partner should be. 

Split Of Revenue

Every payment processing service will take a portion of the sales that go through the system. You want to ensure that you’re still making a fair amount of money with the payment processing system, otherwise, you’ll just be paying for a service to make less or no money.

Application Program Interface (API)

To keep things simple, API is what enables a software application to run. You want an API that will benefit your business and your clients as well as is easy to integrate.


Payment processing is a service, which means there will be a fee. It’s worth gathering a few offers to ensure you get the best pricing on the market along with all the features you want.

Training and Support

Implementing new software into your business can have a lot of kinks. Employees need to be trained and the system needs to work well with your other systems. If the payment processing service provider trains your employees and supports you through the process, the transition will be much smoother. 

How Your Business Will Benefit From Customized Payment Processing

You may be thinking that adding a payment processing service to your business is quite the hassle and what will it do for you anyway? The fact of the matter is that a payment processing service can do more for your business than you think. Benefits you can expect to incur with a payment processing service are listed below. 

  • More Customers and More Sales. Most consumers tend to use debit and credit cards to complete their purchases thanks to banking technology improvements. If you implement a payment processing service into your business, you could access more customers and complete more sales.
  • Convenience. Everyone loves when life goes smoothly. As you probably know, it is incredibly frustrating to be in a store or shopping online only to find they don’t accept the payment methods you have readily available to you. Making payment convenient for customers will ensure that they leave your business satisfied.
  • Legitimize Your Business. Companies that offer debit and credit payment methods are often seen as more established in the public eye. Not only will you be more impressive in the eyes of consumers, but your business will also grow faster and gain a more positive image.
  • Rapid Sales. Credit and debit payments are processed much faster than other payment methods, such as money orders and cheques. Because of the increased processing time, your cash flow will improve and you’ll save more time.

Payment Processing FAQs

How does payment processing work?

To process payments from your customers you’ll need to strike a deal with a payment processing service provider. Once you have your payment processor system set up, it will send your customer transaction data to your payment processor provider who will then send the data to the customer’s financial institution. They will then confirm whether the funds are available on the consumer’s card.

How many payment networks are available in Canada?

Mastercard, Visa, American Express, Interac, Discover, THE EXCHANGE, and UnionPay are the seven major payment networks in Canada.

Are there any payment networks I can work directly with?

Merchants can directly work with American Express or with a payment processing service to process payments.

Bottom Line

At the end of the day, payment processing is not an absolute requirement to operate a business, but it can help improve various aspects of your business. Keep in mind that every business has its own unique goals and objectives, what’s right for your company might not be

Special Offers

Recognized As One Of Canada's Top Growing Companies

Loans Canada, the country's original loan comparison platform, is proud to be recognized as one of Canada's fastest growing companies by The Globe and Mail!

Read More

More From Our Experts
Assessed Value vs. Market Value: How Does It Affect Your Home Equity?

By Mortgage Maestro
Published on June 1, 2023

How do assessed value and market value differ? Find out how your market value and assessed value affects your home equity?
How To Borrow Using Your Home Equity In 2023

By Lisa Rennie

Do you have equity in your home? Find out how you can get a home equity loan in Canada and how much you can borrow.
Keepa – Amazon Price Tracker

By Bryan Daly

If you want to shop or sell on Amazon, you need to know about Keepa. Keepa is a browser extension that tracks Amazon prices and
Should You Get a Loan for a Used Car?

By Bryan Daly

Used cars loan can help you purchase a car even if you can’t pay it outright. The question is, should you get a loan for a used car?
Best Credit Cards For Low Income Earners 2023

By Lisa Rennie

If you're worried about qualifying for a credit card because you have a low income, check out these credit cards for low income requirements and great...
Why Did You Recieve A Credit Memo In Canada?

By Bryan Daly

Have you ever received a credit memo in Canada? Wondering why you got it? If you’ve ever returned a product, you may receive a credit memo instead of ...
What Do You Need To Borrow Money In Canada?

By Lisa Rennie

When you need to borrow money, there are many options to choose from. But finding the right option can be hard. Let's find out which one is right for ...
5 Loans Like Fairstone You Should Know

By Lisa Rennie

If you are looking for loans like Fairstone, you can find them on Loans Canada. These Alternative lenders offer secured and unsecured loans.

Why choose Loans Canada?

Apply Once &
Get Multiple Offers
Save Time
And Money
Get Your Free
Credit Score
Expert Tips
And Advice

Build Credit For Just $10/Month

With KOHO's prepaid card you can build a better credit score for just $10/month.

Koho Prepaid Credit Card