Canada - Country Commercial Guide
Trade Financing

Discusses the most common methods of payment, such as open account, letter of credit, cash in advance, documentary collections, factoring, etc. Includes credit-rating and collection agencies in this country. Includes primary credit or charge cards used in this country. Also includes information on Foreign Exchange controls and Banking Systems, and U.S. Banks & Local Correspondent Banks.

Last published date: 2020-08-03

Methods of Payment

Methods of payment in Canada are like those in the United States domestic market. Depending on the magnitude of the contract, U.S. manufacturers exporting to Canada generally ship on open account, and do not require letters of credit. Typical terms are 30 to 90 days with a discount of 1 to 2% of the invoice for early payment, usually if paid within 10 days. U.S. firms exporting to retailers (mainly to department stores) tend to offer a higher discount for settlement within 10 days. Normal precautions in dealing with a first-time customer should be exercised, and safeguards instituted wherever possible, until a good relationship has been established with the customer.

The U.S. Commercial Service in Canada offers the International Company Profile (ICP) as a tool to evaluate the creditworthiness of potential customers or partners. For information on the ICP, please contact Senior Commercial Specialist Lucy Cicero Latka at

U.S. firms may wish to consider using the U.S. Export-Import Bank’s export credit insurance program. The Export-Import (EXIM) Bank of the United States is the official export credit agency of the United States, and its mission is to assist in financing the export of U.S. goods and services to international markets.

For more information about the methods of payment or other trade finance options, please read the Trade Finance Guide.

Banking Systems

The Canadian banking system is well-developed and mature, and in general highly conservative and regulated with more stringent rules governing leverage and capital ratios than the United States. Although federal agencies control most of Canada’s financial sector, loan and trust companies, as well as life insurance providers, they may also be governed by either federal or provincial regulations. For example, the cooperative credit movement, which includes credit unions and the “caisses populaires” in Quebec, are regulated almost exclusively under provincial jurisdiction. The Office of the Superintendent of Financial Institutions Canada (OSFI) is the primary regulator and supervisor of federally regulated deposit-taking institutions, insurance companies, and federally regulated private pension plans. OSFI also regulates and oversees all foreign financial services companies operating in Canada.

The banking system in Canada groups financial institutions into five main categories:

  • Chartered Banks
  • Trust and Loan Companies
  • Cooperative Credit Movement
  • Life Insurance Companies
  • Securities Dealers

      There are approximately 36 domestic banks, 18 foreign bank subsidiaries, 28 full service foreign bank branches, and four foreign bank lending branches. Combined, these institutions manage more than C$4.6 trillion in assets. Banks account for more than 70% of the total assets of the Canadian financial services sector, with the six largest domestic banks accounting for more than 90% of the banking industry’s assets. The six major banks have a significant presence outside Canada in areas such as the United States, Latin America, the Caribbean, and Asia.

Canada’s banks operate through an extensive network that includes more than 5,890 branches and 18,640 automated banking machines (ABMs) across the country. Canada has one of the highest numbers of ABMs per capita in the world and benefits from very high penetration levels of electronic channels such as debit cards, internet banking, and telephone banking. Nearly 26% of Canadians report that they perform much of their banking transactions using ABMs.

Foreign Exchange Controls

The government of Canada does not restrict the movement of funds into or out of the country and imposes no restrictions on the buying or selling of any foreign currency. Corporations and individuals can operate in foreign funds and arrange payments in any currency they choose.

U.S. Banks & Local Correspondent Banks

Under NAFTA, U.S. banks have a right of establishment and a guarantee of national treatment in Canada. These rights were carried over into the United-States-Mexico-Canada Agreement, which came into force July 1, 2020, and replaced the NAFTA. All major banks in Canada can do business with U.S. banks, and some have operations in the United States. Major Canadian banks have correspondent accounts with most major U.S. banks.