Why Operating a Web Service in Canada Sucks – Part I: AMEX

Okay, I admit right off the top that the title of this post is intentionally contentious to get you reading…. I’m busted.  It doesn’t really suck to operate a web service in Canada, but there certainly are some limitations and difficulties.  One of which I came across earlier after many moons of back and forth with the “other” credit card company, AMEX. 

To put some context to this story, I should give you a bit of background on our business.  We are based in Canada, but have the majority of our customers in the USA.  We try to apply the 80 – 20 rule for everything we do online; in this case we wanted to make paying for our software very easy for 80% of our clientele.  Therefore, we decided to only accept payment in US dollars. 

As many of you out there know, getting set up to accept credit cards online is hard enough as it is just for Visa and MasterCard.  You need to first get an online merchant account which involves a long list of forms that require everything from your credit history to the rights to your first born.  After that, you need to decide and get set up with an appropriate payment gateway.  In our case we chose VeriSign because of its good reputation and the flexibility of its API.  Finally, you have to get your merchant account and your payment gateway talking.  Since we are based in Canada, we ended up having to get another account with an intermediary called Global Payment Systems.  Please don’t ask why our merchant account couldn’t deal directly with VeriSign in the US, and also please don’t ask how long it took for VeriSign to get setup properly with Global Payment Services.  Let’s just say I don’t think they deal with too many Canadian customers.

Okay, so after all the work we put into getting setup to accept Visa and MasterCard in good old-fashioned US dollars and get the money deposited into our US based Canadian bank account, we started getting a number of requests to accept AMEX.  I then started the application process with our merchant account to accept AMEX assuming it would just be a matter of adding AMEX onto our account. 

Remarkably in my first conversation, I was given an impression that it would be just that simple after filling out a few forms.  In a few days I realized it wasn’t going to be that simple.  Our merchant account came back asking for our AMEX account number, which of course I didn’t have.  After some wrangling I realized the AMEX is a completely different animal than Visa and MasterCard and I would have to go through an entirely different application process: AMEX Canada.

So, I started the process and everything seemed to be going fairly smoothly until I introduced the “dirty” acronym in the AMEX Canada vocabulary: “USD”.  Of course no one actually said that they wouldn’t accept USD, they started by saying that the money will be converted to CAD and that they only work with Canadian dollar bank accounts.  I thought “that kinda sucks because we will end up getting dinged with the AMEX conversion rates, but it’s worth it to make our customers happy”.  However, after about two weeks of getting everything setup just right, I then started the process with our gateway to introduce them to AMEX Canada assuming they would speak the same language. 

For some strange reason, I didn’t recall one of my first lessons I learned working as a young engineer in Calgary, never ASSUME anything! 

VeriSign insisted that their system will work as long as I could get them some ID number that they needed.  AMEX Canada said everything will work and eventually got me the number that they initially thought was not needed.  At this point I should have given up, but I thought it would all be worth it, once we are accepting AMEX.  I managed to get a small transaction to go through with Kathy’s AMEX card and after a week, AMEX Canada actually came up with the transaction in their online reports.  The only kicker was that it was the exact amount I charged except in CAD not USD.  I thought maybe it just had to settle before it was converted properly.  When it finally settled, sure enough the total converted amount was not in our bank account.  After sorting it out with AMEX Canada who initially thought I was disputing the charge and wanted the money back, I eventually talked to THE person who told me beyond a doubt that AMEX Canada does not accept US transactions.  It is not just that they convert it to Canadian, they just don’t do USD, period.

To make a long story short, my quest for AMEX was over. Unless I could get approved with AMEX USA, our business could not accept AMEX. 

Perhaps when Google expands their payment services, none of us will need Visa, MasterCard or AMEX.  Check out what Mathew Ingram had to say in the Globe today about Google’s payment services.