Happily, there is more of an opportunity than a challenge when it comes to online retail payment in Canada. There is nothing idiosyncratic about the payment methods that Canadian shoppers expect to see, and there is room for an easier and more convenient payment offering that is currently available.
There is good news and bad news when it comes to Canadian sales taxes. The good news is that they are nowhere near as complex as in the US – a consistent rate applies to pretty much all relevant goods. The bad news is that they do vary by province / territory, rather messily. There are four sales taxes to consider:
GST – national sales tax, currently 5%.
PST – provincial sales taxes, varying by province.
HST – harmonised sales tax, which combines the previous two into a single sale tax.
QST – Quebec has its own version of PST, which it classifies as harmonised, even though it isn’t.
Figure 1: Sales tax by province
If you’re shipping parcel-by-parcel from outside Canada, then these probably don’t apply, but you will instead have to pay customs duties (see below), most of which are, in fact, based on P / QST or HST. If you’re fulfilling from inside Canada they definitely do. If you are using a Canadian domain name, they probably do apply, but before making a final decision, take professional advice.
Remember that if you do need to apply sales taxes which vary by province / territory, you may need to change the flow of your checkout. You will certainly want to display prices ex-VAT.
The payment method landscape in Canada is a rather familiar one, straightforward to implement, with none of the complexities you’ll find in places such as Germany or the Netherlands.
Figure 2: Online payment methods (source: Worldpay Alternative Payments 2nd Edition, 2014)
The preferred eWallet in Canada is PayPal, which has a very large share (22%). Implementing PayPal is pretty much mandatory, and those UK retailers which seem to be already taking Canada seriously, Marks & Spencer and Next for example, are accepting PayPal. Nonetheless, by no means do all local online retailers do so.
The only local method which is really worthy of callout is Interac Online1, which is a way of sending and receiving money directly from one bank account to another.
Usage requires access to online or mobile banking through a participating financial institution, and allows money to be sent to anyone with an email address or mobile phone number and a bank account in Canada. Essentially, it links financial institutions and other enterprises for transactions and it is rather straightforward for the consumer.
Its usage for online retail transactions is quite limited, but some Canadian online retailers are offering it. It probably should not be your first priority, and certainly should not be implemented in preference to PayPal. Apple Pay is also growing in popularity.
Using the same sample of Canadian online retailers identified previously, here are the payment options they offer. As noted, despite the preference of Canadian consumers for PayPal, online acceptance is far from universal. It is tempting to suggest that this is another example of the disconnect between the desires of the consumer and the implementation of online retailing in Canada which has held back its growth until recently.
Figure 3: Payment methods accepted by local retailers
US retailers operating with Canadian domain names nevertheless appear to have taken the view that what works for Americans must be good enough for Canadians too.
Figure 4: Payment methods, sample of US retailers with .CA domains