Page 39 - gs140502
P. 39
CoverStory
First-stop, Canada
Over the past decade a number of U.S.-based acquirers
entered the Canadian market because of its close
proximity and language compatibility. What many
quickly discovered was our northern neighbor has
a distinct culture and business climate that a U.S.
company must thoroughly understand in order to
thrive there.
With a population in excess of 35 million, Canada is
home to approximately 1.5 million businesses with two
or more employees. "Most of them are small businesses,"
said Michael Gokturk, Chief Executive Officer of
Vancouver-based Payfirma Corp. "About 37 percent of
our total payments space is small business customers,
which is the exact target market for Payfirma and other
acquirers."
To provide a better understanding of this market's
scope, the total value of transactions cleared through
Canadian Payments Association systems in 2013
averaged $173.4 billion per business day. Also worth
noting: the Interac Association, a national, nonprofit
debit network owned by the banks in Canada, competes
on par with Visa Inc. and MasterCard Worldwide for a
share of the country's total debit payment volume.
Overall the Canadian payments landscape can best
be described as an oligopoly dominated by a small
number of banks. Thus, it is less fragmented than the
U.S. market. Research indicates that of the bank-backed
merchant acquirers operating in Canada, Moneris
Corp. dominates with about 40 percent market share,
followed by TD Merchant Services, Chase Paymentech,
Global Payments Inc. and a cadre of other established
payment providers.
On a business-etiquette level Canadians respond to
different decision-making influences than their U.S.
counterparts. "Merchants in Canada will typically buy
through an association or a bank referral," Gokturk
said. "They're not really open to telemarketing calls,
which is the traditional sales channel, and the sales
process is actually twice as long. We have a lot of U.S.
partners who go through Payfirma for their Canadian
acquiring, and that's because we know the sales
process."
Another reason U.S.-based acquirers like to partner
with Canadian firms is merchants there trust
Canadian brands. "They want to be able to call a
Canadian number and speak to a Canadian person,"
Gokturk said, adding that merchants often quiz phone
reps to be certain they're local. He also stated the cost
of merchant acquisition in Canada is about half that
of the U.S. market, and Canadian merchants tend to
be extremely loyal, often remaining with their service
providers for seven to 10 years.
39
First-stop, Canada
Over the past decade a number of U.S.-based acquirers
entered the Canadian market because of its close
proximity and language compatibility. What many
quickly discovered was our northern neighbor has
a distinct culture and business climate that a U.S.
company must thoroughly understand in order to
thrive there.
With a population in excess of 35 million, Canada is
home to approximately 1.5 million businesses with two
or more employees. "Most of them are small businesses,"
said Michael Gokturk, Chief Executive Officer of
Vancouver-based Payfirma Corp. "About 37 percent of
our total payments space is small business customers,
which is the exact target market for Payfirma and other
acquirers."
To provide a better understanding of this market's
scope, the total value of transactions cleared through
Canadian Payments Association systems in 2013
averaged $173.4 billion per business day. Also worth
noting: the Interac Association, a national, nonprofit
debit network owned by the banks in Canada, competes
on par with Visa Inc. and MasterCard Worldwide for a
share of the country's total debit payment volume.
Overall the Canadian payments landscape can best
be described as an oligopoly dominated by a small
number of banks. Thus, it is less fragmented than the
U.S. market. Research indicates that of the bank-backed
merchant acquirers operating in Canada, Moneris
Corp. dominates with about 40 percent market share,
followed by TD Merchant Services, Chase Paymentech,
Global Payments Inc. and a cadre of other established
payment providers.
On a business-etiquette level Canadians respond to
different decision-making influences than their U.S.
counterparts. "Merchants in Canada will typically buy
through an association or a bank referral," Gokturk
said. "They're not really open to telemarketing calls,
which is the traditional sales channel, and the sales
process is actually twice as long. We have a lot of U.S.
partners who go through Payfirma for their Canadian
acquiring, and that's because we know the sales
process."
Another reason U.S.-based acquirers like to partner
with Canadian firms is merchants there trust
Canadian brands. "They want to be able to call a
Canadian number and speak to a Canadian person,"
Gokturk said, adding that merchants often quiz phone
reps to be certain they're local. He also stated the cost
of merchant acquisition in Canada is about half that
of the U.S. market, and Canadian merchants tend to
be extremely loyal, often remaining with their service
providers for seven to 10 years.
39
