Though it's the world's longest undefended border, the boundary between the United States and Canada can seem formidable to American independent sales organizations.
From the Maritime provinces to the Yukon, Canada's handful of banks has maintained a firm grip on the acquiring business. Canada has few ISOs of its own, and U.S. ISOs have a difficult time making money there.
But the market's about to open to American ISOs and sales agents, according to SignaPay Ltd., an Irving, Texas-based ISO.
"We can bring down the costs for merchants there and provide ISOs with higher profits than in the past," says Andy Meadows, SignaPay's vice president of sales.
About four months ago, SignaPay formed a relationship with Authorize.net, an American Fork, Utah-based payments gateway that does business in Canada, Meadows says. Authorize.net is run by Visa Inc.'s CyberSource.
The relationship with Authorize.net will help SignaPay work with Canadian value-added resellers that provide point-of-sale software to merchants there, he notes.
SignaPay does not have a value-added reseller referral relationship with Authorize.net and will pursue the value-added resellers independently, Meadows says.
But the Authorize.net working relationship will give American merchant-services salespeople "peace of mind" when talking to Canadian value-added resellers that rely on Authorize.net middleware, Meadows says.
Good relations with the value-added resellers can mean everything in Canada because that group often determines what processor merchants use, Meadows says. The value-added resellers sometimes work with just one processor, leaving merchants with no choice, he notes.
"If a merchant falls in love with a point- of sale system, and it meets their needs and they want to buy the software, the value-added reseller tells them, 'This is the processor we work with,' " Meadows says.
Because of the relationship with Authorize.net and, by association, a host of value-added resellers, SignaPay succeeded in working out an advantageous deal for processing in Canada with Elavon Inc., a unit of Minneapolis-based U.S. Bancorp.
SignaPay passes on 80% to 90% of its cut to ISOs that sell for it in Canada, Meadows says. The percentage ISOs receive depends on the volume of business they bring in to SignaPay, he says.
SignaPay also has a Canadian bank account, operates an office in Canada and has Canadian employees -- expenses American ISOs won't have to shoulder if they work with SignaPay, Meadows says.
SignaPay is looking for ISOs and sub-ISOs ready to go to work in Canada. The ISOs would focus on building relationships with value-added point-of-sale resellers that recommend processing, not go door to door to sign up merchants, he says.
Gaining experience in Canada, where the switch to EMV chip cards already has occurred, also helps prepare American ISOs for the upcoming change to EMV in the United States, Meadows says.