Update on April 23, 2013: HSBC Canada does not offer this chequing account anymore. If you need free pay-as-you-go business banking you may want to consider the RBC Business Essentials Savings Account that I wrote about here.

If you are tired of paying a monthly fee to do your banking, you have the option of opening a no-fee chequing account with President’s Choice Financial and seeing a substantial reduction in bank fees. If you want to earn a higher interest rate on your savings, you are spoiled for choice with a long list of online banks vying for your business. Even the discount brokerage space has vigorous competition. But, for some reason, business banking has been one area that seems completely immune to competitive pressures. If you run a small sideline business and want a chequing account, your options are limited to accounts that charge a monthly fee of $5 or $6 for the lowest-priced, pay-as-you-go, banking package. If your business is grossing about $1,000 per year, you’ll end up paying $60 to $70 just to maintain a business chequing account.

Thankfully, HSBC Canada is injecting some much-needed competition in business banking by introducing a no-fee, business chequing account that it calls HSBC Business Direct. There will be no monthly fees on the account, no charges for an unlimited number of electronic transactions and no fees for a limited number of cheque transactions (both credit and debit). Note that the Business Direct account charges some fees but these should be far and few between for light users and any applicable fees seem to be inline with those charged by the big banks. Also, HSBC says that this is not a limited-time, introductory offer type of gimmick and promises not to charge a monthly fee as long as the account is maintained.

Update: HSBC Business Direct offers both Canadian dollar and US dollar Business Chequing Accounts.

This article has 33 comments

  1. Stunning! Now we just need a USD no-fee chequing account!

  2. Exactly Squawkfox…. that’s what I’m waiting for too! I can’t believe there is some competition entering the Canadian banks… wow!

  3. I’m seeking a low cost banking account for my small bussiness now.Thanks you for your information. I’ll try it.

  4. I couldn’t seem to get a clear answer from them on depositing a $US cheque to a $C account (I receive $US cheques occasionally, but want to convert them to $C). When I called their information line, the CSR couldn’t find a specific fee associated with a foreign currency deposit, although said that I would need to do that at a branch, which would incur a $2.50 fee. If that’s only once per month, however, that’s way less than I’m paying at CIBC.

  5. So what is the difference between a personal checking account and a business account? What extra “things” do you get with a business account?

    • Canadian Capitalist

      @Sandy: HSBC has just launched this account and CSRs are not clear on what fees are applicable and on what transactions. I had to ask them about the fees for cheques and was told that 50 cheques cost about $80. That’s about the same as with RBC that I currently bank with. The fee schedule seems to indicate that depositing a foreign currency cheque would incur a $2.50 fee plus conversion charges. Your other option is to open a no-fee USD business chequing account.

      @Four Pillars: If you run a sole proprietorship, you could just open a personal chequing account. However, if you incorporate, you don’t have a choice: you need a business account. You don’t get anything extra except monthly fees and transaction fees that will make you weep 🙂 Just ask any small business owner.

  6. I think the $2.50 fee is for an in-branch transaction (which is the only way to deposit a cheque requiring foreign exchange). Currently, I don’t write cheques, only make transfers to my personal account to cover expenses and payroll — business and personal accounts both at CIBC — so buying cheques would be an additional expense. Figure 1-2 $US per month @ $2.50 each, plus 2-3 cheques per month at $1.60 each (for the physical cheques as per your cost estimate, but no fees) instead of direct transfers that I’m doing now, my fees would be between $5.70 and $9.80 per month. Probably not worth the trouble to transfer.

  7. I had a look at that brochure and the design needs some work. I found it unnecessarily confusing. But it’s good that there is a new low-cost/no cost option out there for the small business owner.

    On the personal banking side, I like the convenience of having all my accounts with the same institution to facilitate inter-account transfers. I frequently transfer funds between my chequing and non-registered investment accounts, for example. I need to keep a minimum $1K in my chequing account to avoid fees, which I do without fail. In a sense I’m making 4-5% annually on that money by avoiding the monthly fees.

    I haven’t paid a fee for personal banking (including withdrawing funds from an ATM) in over 10 years, for which I am very proud :).

    I definitely see the advantage of the President’s Choice account and other like accounts, but for me it’s not worth the hassle to make the switch when I have a free (if not in opportunity cost terms) and convenient set-up already.

  8. I recently set up one of these business accounts, but have yet to make my first deposit. The one cost that will be fairly significant is to purchase cheques, the HSBC service representative indicated that it will be $100 or greater. Although HSBC branches and ATMs are not common in some parts of the country, I understand that an agreement exists with other banks to use their ATMs no fee (i.e. BMO, National Bank) which makes it more convenient.

  9. Sure, just after I close my business! :p

    Still, this is good news. I plan on opening another business shortly, so I’ll definitely look into HBSC.

    @Anjo – holy crap, that’s a lot! How many cheques do you get for that?
    Not that I’m too concerned about paper cheques. I hardly use the things.
    After 6 years in business, I’m still on the original pack of 30 I got when I opened my business account at TD. The only reason I’ve used more than one (and I used that one to write VOID across to be able to fax to service providers) was because I had a freelancer for a while who preferred to be paid in cheques instead of electronically.

  10. Caitlin: I am not sure how many cheques $100 would get you, but the service rep seemed to think this cost was fairly normal for business cheques. I have no idea if this is true or not. I am going to try and avoid using cheques and make payments electronically.

    • Canadian Capitalist

      @Anjo, @Caitlin: Cheque books for business accounts are fairly expensive. IIRC, RBC’s charges for cheque book was roughly the same as HSBC’s. I didn’t think the charges were way out of line.

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  12. This is great news.

    Thanks for the update and what they charge and don’t charge for.

  13. Thanks for letting us know!

  14. Cheque Print Solutions Inc. is a Calgary based cheque provider. We have been printing cheques for 10 years with well over 75 million cheques printed.
    If you are looking for an alternative supplier to the banks, take a look at our website for pricing and information or call toll free 1.877.846.6996.
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    • Canadian Capitalist

      @John Kittell: Can you print cheques for business accounts? It’s not clear what the pricing for business accounts is. If its significantly cheaper, I’ll be willing to give Cheque Print a try.

  15. Yes, we can print for business and personal use.
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  16. Thanks for the news CC, I’ve been shopping for no fee/low cost business account for some time now.

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  18. This is excellent news, good to see some more competition in the Canadian banking sector.

  19. Here is another alternative to the bank supplier as well.

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  22. Don’t waste your time with HSBC. The customer service cannot deliver on any basic needs. It takes months before a bank account setup( which is probably not you were asked for); where any other major bank takes 1 day. The lengthy initial process should have set off the warning flags in my head but I still wanted to frugal and avoid fees. Big mistake, I could not even get basic essentials executed at this bank.

  23. We have updated our website.
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  24. the account is free if you don’t do anything or if you have only electronic transactions . Deposit of each cheque is $5. It’s better to go with RBC pay as you go which is $6/m but includes up to 8 transactions per month.

  25. Michael Braucht

    Opening an HSBC small business account has been a very inconvenient experience.

    Compared to my previous experience (RBC), I found the application process almost ridiculous. On top of the silly application process (fill EVERYTHING out online, and then do the exact same thing OVER THE PHONE… uhm, why have the option to do it online???? and THEN have to go to the actual branch down town to SIGN EVERYTHING…. frack!!!!), they tell me cheques have to be in the “EXACT” name of my business (ie. “Silly” instead of “Ministry of Silly Walks”). I have never heard that in my life and deposited many cheques for many businesses and charity organizations over the years.

    I was required to visit their ONLY branch in Montreal, which is down town (yeah, lots of small business there), and not just once, but also to activate the debit card. Seriously? Who doesn’t do this online or over the phone. So 1990!

    Honestly, for the last process of going downtown to activate my debit card, I am seriously considering cancelling the whole thing and go pay RBC the $6/month for convenience. This is “Silly”.

    • @Michael: I hear you on the inconvenience factor. I did sign up for the HSBC small business account but never bothered to activate it because the only office was in downtown Ottawa.

  26. I just spoke with HSBC and it appears they no longer offer a no-fee small business chequing account. They said it has been under review for the last 3 weeks and they don’t know if they will offer it again. Know of any alternatives?

  27. I talk to the HSBC and they do not offer the service any more. I would be interested in alternatives too.

    • @Liliana: Thanks for the comment. I’ll update the post that the HSBC No-Fee Business Account is no longer available.

      I personally have a business account with RBC. Recently, RBC offered to convert my business chequing account into a savings account. The savings account charges fees on a pay-as-you-go basis. If I recall correctly, deposits cost $1.00 and two free debits per month. So, if you have just a couple of transactions per month, this may be a cost-effective option for you.

      http://www.rbcroyalbank.com/business/accounts/bus-ess-saving.html

  28. HSBC just informed me that it cuts off small businesses including mine. http://www.vancouversun.com/business/HSBC+cuts+some+small+business+clients/9289838/story.html

    So this is not an option anymore unfortunately.
    I cannot find any other fee free business bank for small business.