What often looks like a steal online from an American retailer can very easily turn into a not-so-great deal as a result of hidden fees that you might not be aware of.
When you make a purchase on a U.S. website and check out with a credit card issued by a Canadian bank or financial institution, your purchase will be converted into Canadian funds on your statement. The rate the bank charges in the official exchange rate plus a 3 - 4% service charge. At the time of writing it would cost you $1.3107 Canadian dollars to purchase $1.00 U.S. dollar.
E.g. You made a purchase on a U.S. website for $300.00 it would be converted into Canadian dollars and cost you approximately $403.25.
Most American retailers offer Free Shipping over $99.00. We do too. What they don't tell you is that it only applies to the Continental U.S. (the lower 48 states) and not to Canada. Since Canada is another country, you get charged the Intenational rate used by UPS/FedEX/DHL. These rates are generally about 3 - 4 times what it would cost to ship the item in the U.S. Also, you have to understand that the shipping charges are in U.S. funds and must be converted into Canadian funds to get their true cost.
When you import something to Canada, the goverment needs to know what the product is and if it's illegal, dangerous, prohibited, protected etc. To inform them you have to fill out and submit forms to tell them what you are bringing into the country.
To expedite this process, you essentially hire the shipping company to represent you to bring your goods across the border. They will fill out the appropriate forms, and pay the taxes and duties owing, to bring your package into the country.
For this service they charge a brokerage fee. This fee is a percentage of the shipment's value or a minimum fee.
The shipping company then collects their brokerage fee and the Canadian taxes and duties owing from you when they deliver your package.
Please note that these fees are over and above the regular shipping charges that the American website or the UPS/FedEx/DHL etc. shipping estimator will quote you.
Below, is a list of UPS's brokerage fees. (This was taken from their website as of February 20, 2015).
Note, that the invoice is converted into Canadian funds before the brokerage fee is applied.
|Invoice Amount - CAD Dollars||Brokerage Fee|
|$0.00 - $20.00||FREE|
|$20.01 - $40.00||$7.00|
|$40.01 - $60.00||$16.75|
|$60.01 - $100.00||$19.95|
|$100.01 - $150.00||$26.75|
|$150.01 - 200.00||$30.40|
|$200.01 - $350.00||$48.00|
|$350.01 - $500.00||$53.40|
|$500.01 - $750.00||$63.60|
|$750.01 - $1000.00||$71.80|
|$1000.01 - $1600.00||$84.85|
|$1600.01 - $2500.00||$96.50|
|Each Additional $1000.00||$6.70|
Customers are responsible for payment of Canadian duties and Canadian taxes. When funds are not provided in advance by the customer, then UPS/FedEX/DHL etc. must post a bond to allow your shipment to be released in advance of payment to the Canada Border Services Agency (CBSA). When this happens the couriers charge a fee. UPS charges 2.7 percent of the invoice amount (minimum $6.00). This fee is additional to the brokerage fees and any shipping and handlling fees that they may charge for getting your order into Canada and to your doorstep.
Now you can see why that product, that you thought was a real bargain, turns out to be more expensive when you add in the International Shipping, the Brokerage Fee, the Bond Fee and the Currency Exchange.