How to ensure compliance with the requirements

Written confirmation of a Payor's PAD Agreement

You must send a written confirmation to the payor at least 10 calendar days before the first PAD under an Agreement.

See Appendix IV of Rule H1 for information about the mandatory elements the confirmation (PDF, 447 KB) - External link.

Note: If your company and the payor agree, the standard 10-day period for providing written confirmation can be reduced or waived. If the payor waives the confirmation requirement before the due date of the first PAD, the beneficiary must provide the payor or make available to them a confirmation within 5 calendar days of the date of the first PAD. If the Payor's PAD Agreement contains a clause allowing a reduction in the standard 10-day confirmation period or waiver of confirmation, this clause must be prominent (underlined, highlighted or in bold) to ensure that the payor is aware of it. No waivers may be made for sporadic or one-time PADs.

Additional authorizations for sporadic or one-time PADs

The Payor's PAD Agreement must contain provisions that address this topic.

A Payor's PAD Agreement that authorizes sporadic PADs must state that the issuing company is required to obtain due authorization from the payor in accordance with Rule H1 for each sporadic PAD that the payee issues against the payor.

For example, recording a telephone call in which the payor authorizes the PAD with a password or secret code could serve this purpose, provided that a signed Payor's PAD Agreement is already in place.

A Payor's PAD Agreement that authorizes a one-time PAD must state that the issuing company is required to obtain a signed or duly authorized Payor's PAD Agreement for each sporadic PAD that they issue.

Pre-notification requirement

If the PADs are for variable amounts or if you plan to adjust the amount specified in the Payor's PAD Agreement, you must notify the payor in writing at least 10 calendar days before the withdrawal date, unless the payor has agreed to reduce or waive this pre-notification, either in the Payor's PAD Agreement or through a separate authorization, or unless the payor directly instructs you to change the amount.

Exception: Pre-notification is not required if there is a change in the PAD amount due to a reduction in a federal, provincial or municipal tax.

Note: If a clause to reduce or waive the standard 10-day pre-notification period is included in the Payor's PAD Agreement, it must be prominent (underlined, highlighted or in bold) to ensure that the payor is aware of it.

Retention of Payors' Agreements and authorizations

You must retain a copy of each Payor's PAD Agreement, an audit trail and any other authorization while the Payor's PAD Agreement is in force and for at least 1 year after the last PAD. You must be able to produce them on request.

Cancellation provisions for payors

Your Payor's PAD Agreement must contain information on how payors can cancel the PAD arrangement.

You must also act promptly on payors' instructions to cancel their PADs. In these cases, PADs should be cancelled before the next scheduled withdrawal, as long as you have received the request in sufficient time (normally a few days) to allow you to do so. You must ensure all PAD cancellation requests are processed within 30 calendar days.

Notice to customers if your company changes its name

If your organization changes its name, you must provide written notice to each payor at least 10 calendar days before the next PAD.

Transferring PAD Agreements to another company

You may not transfer any of your contractual agreements with payors for PADs to another organization (for example, through the sale of the company or a business unit, or to a collection agency where otherwise permitted) unless you have provided payors with the full details of the transfer, including the name and contact information of the new company, at least 10 days before the first PAD is issued in the proposed new company's name.

Furthermore, you may not transfer your Enrolment Agreement or equivalent contract with your financial institution to another party without your financial institution's written consent.

Responsibility for payor reimbursement claims

PersonaI PADs

If a payor disputes the validity of a PAD within 90 days and makes a claim that a debit was not made in accordance with their instructions, under Payments Canada Rules the payor's financial institution is required to reimburse the funds. The PAD will then be returned through the clearing system, and Desjardins will charge it back to you.

Business PADs

For Business PADs, the recourse period is 90 calendar days if the payor claims that there is no agreement and 10 business days for other discrepancies.

Conditions that apply to reclearing returned PADs

If a PAD is returned due to insufficient funds (NSF), you can re-present the payment item only once, within 30 days of the original transaction. If you re-present the PAD, it must be for the same amount as the initial transaction.

Notice of change in the payor's banking information

If you receive a Notice of Change from Desjardins advising you of a change to a payor's branch transit number or account number that does not involve a customer changing their financial institution, you must update your files to reflect the new information so that the PADs can continue to be routed efficiently to the correct account.