How to deal with fees for Canadian checks?

September 5, 2005 10:24 AM

Banking question: I have a small business in the US, I live in the US, I'm a US citizen. A number of my clients are in Canada. Everytime they send me a check, my local bank has to take a flat $10 out of it - even if its in US funds. Most of these checks are less than $50, so that's a pretty big hit. Apparently this $10 fee is not just my bank, but from their processor. I know I could ask my clients to pay in paypal, but a lot of them aren't set up to do it that way, and I'm reluctant to make them change. I emailed a canadian bank, thinking I'd just mail a deposit off once a month, and then every few months transfer funds, but I need to be there in person to set up the account. Do I just need to insist that clients use paypal? Are there other options I'm not thinking of? Any advice would be welcome.
posted by korej to work & money (14 comments total)

Electronic Funds Transfer (EFT). I worked in a finance department for quite a while and we used to use this for freelancers all the time (although, truth be told, I don't remember if any of those freelancers were Canadian).
posted by SeizeTheDay at 10:28 AM on September 5, 2005

Why don't you just ask them to send you a money order in US funds? They can easily get that at a postal outlet or bank.
posted by greatgefilte at 10:32 AM on September 5, 2005

Ask the Canadians to get money orders in American funds. They can do so at their bank, usually, or at the post office. Those will be drawn on an American bank, so you presumably won't have to pay the fees.

Canadians will be familiar with the need to get USD money orders for buying things from the US. (In fact, I'm very surprised that any American business would accept cheques drawn on Canadian banks in CAD.)
posted by mendel at 10:32 AM on September 5, 2005

My Toronto bank (TD Canadatrust) has a "partnership" with an American bank. They let me make cheques thru it. I think it costs $3 service charge or something like that. Perhaps you could ask your clients to do this. They want to ask their bank, "Can I get a cheque in US$ drawn on a USA bank?".
posted by dobbs at 11:12 AM on September 5, 2005

(my local bank has to take a flat $10 out of it - even if its in US funds.)
posted by hugsnkisses at 11:52 AM on September 5, 2005

You might want to consider getting a merchant account and letting your clients pay with a Credit Card.
posted by johannes at 12:12 PM on September 5, 2005

This sounds like a good reason to go shopping for a new bank. There are many ways to sort this problem out, and a good business banker can help you set up a fee-sensitive way to do so. (It might be as simple as setting up your Canadian bank account via their correspondent bank in Toronto, sparing you the trouble of a trip.)

EFTs are a great solution, but only if your clients are sizable enough that their banks give them free outbound wires which can be authorized remotely. If they're mom & pops, they might have to pay a fee and/or visit their branch to send a wire, which doesn't solve your (collective) transaction cost problem.
posted by MattD at 12:17 PM on September 5, 2005

I find this a little absurd. In the late 90's I regularly deposited personal cheques from US banks at the Royal Bank of Canada with no fee (well, they get a few percent premium on the exchange rate, but that is pretty hard to avoid). The fact that you can't do it the other way around is completely ridiculous considering the Canadian chartered bank system (which means US banks only have to deal with a handful of Canadian counterparts). Typical I suppose, but still ridiculous.

Money orders are okay, but they aren't that wonderful a solution. A trip to the post office and $4 to pay for a transaction (fees and postage)...

Most of my recent low dollar transactions have been cash in the mail - just wrap the money in some heavy paper - there haven't been many, but it has worked fine. Depending on the nature of your business I suppose that really isn't an option for you...

I duno... I think if you want to encourage Canadian customers you should find a way to accept payment that is as easy on the customer as possible. If that means a trip to Canada to arrange something or a partner in Canada or whatever, well that is the cost of doing business. If you just want to keep the Canadians 'happy', but you don't care much about attracting them, money orders are good enough.
posted by Chuckles at 1:05 PM on September 5, 2005

Note that these aren't CAD cheques...they're USD checques drawn on Canadian banks. I regularly deposit these kinds of cheques in my US account and get charged a $5 fee (hint: I have no money, if I can get a $5 fee, a small business can surely get a better deal than that. You're getting ripped off).

So when I pay others using USD canadian bank cheques, I add an extra $5 to the amount. Give your customers the option of sending a USD money order or adding the fee amount to their cheques.
posted by duck at 1:32 PM on September 5, 2005

Hmm... maybe if I invoice through paypal, they can use a credit card without having to open a paypal account. I'll still lose some to paypal fees, but it won't be as bad. Its probably less than $100-$200 in business monthly, so not quite worth a merchant account.
posted by korej at 1:49 PM on September 5, 2005

Which state are you located in? Are you depositing into a personal or business account? If it's a business account, is the ownership listed as a DBA (Doing Business As) or an LCC or Corporation? If it's personal, are the checks being made out to you? Answer those, and I can provide some more specific assistance to help you. Email in profile if you don't want to get that specific here.
posted by cyniczny at 7:04 AM on September 7, 2005

I'm in New Mexico, its a business account
Not sure if its in the account records (should be) but the company is an S-Corp. Checks are made out to the business.
posted by korej at 8:23 AM on September 7, 2005

Well, because you have a business account, they're going to sock it to you with more fees. If these checks are made in US dollars, and are drawn on a US bank, then they shouldn't be charging you anything. If they're drawn on a Canadian bank, then that fee will apply for handling. Be sure to check the drawing bank - some checks may show the Canadian bank AND an US bank that will say "payable through Wells Fargo" or something similar. Again, in those cases, you shouldn't be charged a fee and the bank should be handling them like regular transit checks. You can also try going to a smaller, savings bank or credit union instead of a commerical bank, since their fees might be smaller. Paypal is a way to get around it with cheaper fees, but might end up costing more time chasing them up if they freeze your account.
posted by cyniczny at 6:19 PM on September 7, 2005

Thanks all - will shop around for a bank with better fees, and in the meantime check on paypal or another sort of quasi-merchant account.
posted by korej at 6:48 AM on September 8, 2005