In 2025, online payments in Canada are evolving quickly. Shoppers want secure payments they can complete in seconds, often from mobile devices, while merchants need payment solutions that lower transaction fees and protect cash flow. For most Canadian businesses, the main payment options at checkout are pay by bank, PayPal, and credit card payments. Each method can handle online payment and online bill payments, but they differ in cost, settlement speed, and risk.

This guide compares pay by bank, PayPal, and credit or debit card payments so Canadian businesses can choose the best online payment method for their customers and their bottom line.

What is pay by bank (Interac e-Transfer®)?

Pay by bank uses Interac e-Transfer and Interac e-Transfer for Business to move money directly between bank accounts. Instead of going through traditional card rails, customers authorize secure payments from their checking account or other eligible account, and the funds are sent straight to the merchant via bank transfers.

From the customer’s perspective, this feels like a familiar Canadian way to pay online. They confirm the payment information in their banking app, and the amount is sent without entering a card number or sharing an account number with a new merchant. For businesses, pay by bank often brings:

• Lower, more predictable transaction fees than percentage-based card processing fees
• Real-time or near-real-time settlement, rather than waiting multiple business days
• No traditional card chargebacks, which reduces disputes and administration

Modern pay by bank integrations make this feel as simple as any other payment option in checkout, including on mobile payments, without asking customers to manually send money or write a paper check.

Credit cards: familiar but costly

Credit and debit cards remain the most familiar online payment method for many shoppers. They are widely accepted, work across Canada and the United States, and support multiple currencies, which is valuable for cross-border online sales. Many customers also value card rewards, which makes credit card payment hard to ignore.

For merchants, however, card-based payment options come with notable costs and risks:

• Transaction fees and processing fees are usually a percentage of the sale plus a fixed amount
• Cross-border and FX markups increase total costs when selling outside Canada
• Card payments involve fraud risk and chargebacks, which can reverse revenue days or weeks after a purchase

Cards still have an important role, especially for international customers and travel-related purchases, but they are rarely the cheapest way for Canadian small businesses to accept domestic online payments.

PayPal: global trust, but expensive

PayPal is a popular way to pay online for Canadian consumers who shop internationally. Many already use PayPal to send money, and they like that their payment information is stored securely so they do not have to re-enter details on every site. For some, PayPal feels safer than typing a card number directly into a new checkout.

But on the merchant side, PayPal often behaves like a premium-priced wallet:

• Fees can be similar to or higher than card transaction fees
• Cross-border and currency conversion add costs when sending money across borders
• Settlement into your bank account can take additional time, affecting cash flow and how quickly you can pay vendors or meet due dates

For Canadian businesses looking at PayPal alternatives, especially PayPal alternatives in Canada, pay by bank via Interac offers a secure payment option that keeps funds in Canadian dollars and moves money directly between bank accounts.

Pay by bank (Interac): the 2025 standout

Pay by bank via Interac has emerged as a standout choice for Canadian businesses that want efficient payment options without sacrificing security or customer experience.

Key advantages:

• Lower fees: Pay by bank typically uses simpler pricing that can reduce overall processing fees on domestic transactions.
• Faster funds: Merchants often receive funds in real time or within the same business day, improving cash flow and reducing reliance on credit.
• Fewer disputes: Without traditional card chargebacks, merchants see fewer disputes and less complexity in their terms and conditions around refunds and reversals.
• Customer trust: Canadians already use Interac for sending money, which makes pay by bank an easy extension for online payment and bill payments to a service provider.

For many Canadian small businesses, pay by bank is the most efficient core method for accepting secure payments from domestic customers, while cards and PayPal remain available for specific segments.

Fees and FX: side-by-side comparison

Rather than tracking exact rates that change over time, it is more useful to compare typical patterns across payment options.

• Pay by bank (Interac)
  • Usually offers lower, more predictable transaction fees for domestic Canadian dollar payments
  • Works best when both the merchant and customer are in Canada
  • Funds often arrive in near real time, rather than waiting several business days
• Credit or debit card
  • Typically charge a percentage of each transaction plus a fixed fee
  • Cross-border and FX markups increase costs for payments from outside Canada or to the United States
  • Settlement batches usually take one or more business days before appearing in the merchant account
• PayPal
  • Fee structure is often similar to or higher than card processing fees
  • FX conversion and cross-border payments add extra layers of cost
  • Funds remain in a PayPal balance until transferred to your bank account

For domestic online payments in Canada, pay by bank tends to deliver the best mix of lower fees and faster access to funds.

Approvals, fraud, and chargebacks

Approval rates, fraud risk, and chargebacks have a direct impact on revenue and operational workload.

• Credit cards and PayPal
  • Run on card and wallet infrastructures that attract fraud attempts
  • Rely on layered security checks that can sometimes decline legitimate payments
  • Allow chargebacks that can reverse completed payments and lead to additional investigation, especially if payment information is disputed
• Pay by bank (Interac)
  • Uses bank authentication, where customers confirm payments from their checking account or other eligible account
  • Moves funds directly between accounts, reducing opportunities for card-based fraud
  • Does not operate on the traditional card chargeback framework, which cuts down dispute volume

For higher-risk verticals, reducing fraud and chargebacks by shifting more volume to pay by bank can be a significant advantage.

Best-fit by industry and use case

Different industries need different mixes of payment options, especially when balancing customer experience with cost and risk.

• eCommerce and retail (Canadian focus)
  • Pay by bank: ideal for domestic customers who want to pay online quickly while helping merchants control transaction fees
  • Credit or debit card: important for rewards-driven shoppers and cross-border buyers, including customers from the United States
  • PayPal: a useful option for certain international customers and marketplaces
• iGaming and other higher-growth verticals
  • Pay by bank: strong for deposits and withdrawals, thanks to better approvals, fewer chargebacks, and predictable settlement
  • Cards and PayPal: secondary options available for players who prefer them
• Billers and service providers
  • Pay by bank: well-suited to recurring invoices, online bill payments, and bill payments to a service provider with clear due dates
  • Cards: can support customers who want predictable recurring credit card payments

When you align each method with its strengths, you give customers useful payment options while protecting your margins.

Which payment method is best for Canadian businesses in 2025?

For Canadian customers paying Canadian businesses, pay by bank via Interac is often the best core option in 2025. It combines secure payments, lower transaction fees, and faster settlement than many traditional card or wallet payments. Credit cards and PayPal remain important, especially for cross‑border commerce and specific customer preferences, but they work best as complementary methods rather than the default for every payment.

If you are exploring PayPal alternatives in Canada, or simply want to improve your online payment mix, adding pay by bank to your checkout is one of the most effective ways to cut costs, speed up settlement, and give customers a trusted way to pay online.

Want to lower your payment fees and make paying easier for your customers? Get started with Paramount Commerce and accept pay by bank with Interac e-Transfer today: https://www.paramountcommerce.com/contact