I read an article last week in Business Edge about yet another study published by a bank claiming that Canadian small businesses are “behind the times” on e-commerce and the Internet.

I see these about once every month, and I’m getting tired of the big banks telling small businesses they need to be more progressive with the Internet and be more like U.S. e-merchants.

First, let me pick on the author of this last report. What does CIBC World Markets, a big global brokerage firm, know about small business? When is the last time they helped a SMALL business raise money? And what are they doing to facilitate small business e-commerce?

I think the finger needs to be pointed at the banks in general.

The Canadian Federation of Independent Business did a study that shows that 90 per cent of business services firms are using the Internet in 2002, 60 per cent of small businesses (under five employees) use the Internet and 52 per cent consider themselves e-businesses.

While 100 per cent of banks have websites, they are very behind the times on e-mail, which is the No. 1 corporate activity on the Internet. My bank manager’s business card still doesn’t show an e-mail address. When is the last time you saw a business card from any other type of business without it?

Now, let’s look at what’s really happening in e-commerce.

“E-commerce” is any system to enable the sales of and payment for merchandise over the Internet by electronic means. E-commerce is more than just having a website.

A site showing products without any e-commerce is just an online brochure or catalogue. It’s like a store without a cash register, or a bank without tellers. Without e-commerce, a website cannot drive sales (very important today when lenders or investors seem to be avoiding small businesses).

In the past, Canadian banks required significant security deposits for an online merchant account. Three years ago, I was quoted 25 per cent of forecast first-year sales.

Since most small businesses don’t have that much cash lying around, they had to borrow from the bank at prime-plus to create a GIC that would be used as security.

Most Canadian banks, now as then, serviced only either VISA or MasterCard, but never both. That put Canadian merchants at a distinct disadvantage compared to those in the U.S., where, somehow, much smaller banks were able to handle both credit cards.

Three years ago, the Royal Bank recognized that the effort required to “securitize” merchant accounts exceeded the risk. They waived any initial security for online merchant accounts, and consequently signed up thousands of businesses in the first year.

Recently, the Royal Bank transferred its merchant VISA services into Moneris, a joint venture with the Bank of Montreal, which now handles MasterCard as well with a single merchant account.

While Moneris has a good website, I had to talk to a service rep to get pricing. The cost of Moneris is $250 for the merchant account (double if you want to handle both U.S. and Canadian funds), $150 for its e-commerce toolkit, plus $45 per month (plus transaction fees and the usual credit card discount of three to five per cent).

When I called Scotia Bank last week, they were similarly helpful. Their website was informative, and the customer service rep was quick to offer pricing. Their service costs $500 for setup and $60 a month (plus transaction fees and credit card discounts).

TD Canada Trust has an e-commerce service that costs $800 for setup and $65 per month (with higher transaction fees than the other banks), but you are included in their online mall. TD Bank still has security deposit requirements for online merchant accounts.

The National Bank has launched ClicCommerce, a joint venture for e-commerce only for business-to-business (B2B) transactions (though that site’s links are all broken).

And last, when I searched CIBC’s website for “e-commerce,” all I found were speeches by vice-presidents, but no links to small business services, and their call centre provided no information.

Are banks and their services for small business improving?

I called a branch for each bank, and was foisted on their 1-800 call centres, who often couldn’t answer my simple questions. Canadian banks do not have basic product knowledge at the retail branch level, which is where their small business customers bank.

The exception was TD Canada Trust where the manager researched its website, contacted me with the link and had its call centre phone me.

How can the banks expect small businesses to adopt technology and services that a bank offers if no one can talk with them about it?

They need to look in the mirror as to why Canadian small businesses are not adopting e-commerce technology more aggressively.

(Mark Ruthenberg is the general manager of FoundLocally.com Media Inc. and president of Alberta New Media, Calgary.)