I own a small retail store in Canada and have an existing marketing
website.  Many of my customers have requested to be able to pay for my
products over the internet.  As such, I am investigating the
possibility of eCommerce enabling my website.  I want to use a
Canadian bank as my processor but I don't know which one is best or
even know how to compare their eCommerce products.    Secondly, cost
is a major concern.  I do not want something that is going to require
extensive and expensive development work to implement (java
programming, etc) and maintain (i.e. monthly charges). I have seen
some non-bank Canadian payment processing solutions but I am skeptical
about them, but if they have a better offering, I might consider them.

Could you please provide me with a list of Canadian based payment
processing solutions (bank and non-bank) and what is your take on
them. More importantly, who's the leader and isn't going to close
their doors anytime soon?

Paypal is most efficient for volume less than US$2,500 per year. 
Paymentech is best for volumes > US$50,000 per year when transaction
dollar amount is > US$50.  Expect to pay US$0.10 per transaction plus
2.5% of the transaction amount for Paymentech.  Next year, many new
service providers will be providing lower cost services.  Check "Bill
Me Later" at http://www.bill-me-later.com .  Credit cards as we know
them are fading as fact as the Black and White television or Betamax
VCRs.

There are two elements, the bank who provides you with the merchant
account (could even be your existing bank) and the online processing
facility which is the enablement or the online 'terminal' which
replaces the swiping process. You can source two separate provisions
or a company that provides both. If you are wanting to supply only
Canada, a Canadian dollar currency account will suit you fine. However
if trading internationally you may want to take transactions in say
U.S. dollars and need to source a Canadian bank that will allow you to
transact in USD.
regards lot-ga

Thank you jsgreenusaf-ga and lot-ga for your comments. 

Perhaps to clarify my situation further. I want to sell in Canada only
for the present time. I have looked at services such as Paypal and I
don't think they lend themselves accordingly. My estimated transaction
volume will probably be anywhere between 100-500 a month depending on
the time of year. Please let me know if further clarification is
needed.

Hello I hope I can give you all the answers you seek.  As a Canadian
yourself (myself included) you probably know that Canada's banks are
amoung the worlds most regulated.  In order to do any credit card
processing in Canada you must have a merchant account with one of the
chartered banks (TD Canada Trust, Bank of Montreal, Bank of Nova
Scotia, Royal Bank, and CIBC) There are others but these offer the
best rates. (see http://www.cba.ca/cba/eng/tools/Brochures/tools_bankfacts_2000_12.htm)
for a list of the chartered banks.

Now these banks currently only do credit card processing through
terminals at the store they rely mostly on third part processors. 
Your best bet is to call your banker for your existing merchant
account and ask him to refer you to some processors.  They do keep a
list of Canadian processors that they work with.  If you don't have a
merchant account I suggest you first call up Royal Bank as they are
geared to small business in Canada more so then the others.  And have
good rates.

I would suggest you not go with a US based solution.  There will be
alot more involved then you think.  Especialy if you only sell to
Canadians.  Visa has set up new IPSP rules.  Were IPSP's (ie web
masters) must process payments in the contries they reside in. (ie.
This means if you are a US webmaster you must process your
transactions in a US bank. If you are French you need to process your
transactions in a EU bank) See http://www.ipsp-faq.com/ for further
details.
To get around this some have gone and made themselves a US resident,
by forming an S-Corporation in the US, renting a P.O. box and filing
their IRS tax returns.  Clearly in your case an added expense. (in
mine as well)

You must note that Truely Canadian based processors are hard to come
by.  This is becasue again the heavy regulations we have(ie. Each bank
can only process one type of credit card, eg. BMO does MasterCard, TD
does Visa, etc...) and how the banks work.  Many of the banks do not
have online processing per say.  You must access their systems via
modem (for small retailers via that terminal) or via DataPac dedicated
phone line.  Thus not many processors have poped up in Canada. 
Setting up DataPac Lines with every Schedule I chartered Bank to cover
all merchant accounts and credit cards is a tall order. TD offers a
set of DLL code that lets you process them online (IE no DataPac), but
the years licence is over 20K and there is alot of c/c++ coding to do.
(That may have changed these past 18 months though)

So again you should call your banker for your existing merchant
account they should be able to refer you, this way you can use your
existing merchant accout for both your store stuff, and your online
stuff with out costing you two merchant accounts.

One Canadian Solution I do know of is SecureShop by Pathway
Communications.
www.secureshop.net and www.pathcom.com for Pathway.  They are based in
Toronto, and deal with BMO and RBC.  You must have a merchant account
with one of those banks as they are the only banks they clear through.
 Allstate Insurance used to work through them untill they decided to
set up their own DataPac link with the banks.  Beer.com, Pembrook
insurance, NDP (yes the New Democrat Party, online donations), and
others.

If I recall it will cost 0.25 CAD per transaction.  Ask for a Mr
Biris. at 416-214-6363.

I hope I could help you with your problem.

PS.  If your also looking for Credit Card Fraud Screening I can
personally help you with that.  Just Ask.