Types of PADs and features
There are 4 types of pre-authorized debits (PAD). There are 3 for issuing companies and 1 for financial institutions.
Type of PAD | Features |
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Personal PAD |
Recourse rights and claimsPayors have 90 calendar days to make a claim with their financial institution that there is no Payor's PAD Agreement, if the Agreement was revoked, if the PAD does not comply with the Agreement or if the payor did not receive the pre-notifications specified in the Agreement. |
Business PAD |
Recourse rights and claimsPayors (businesses) have 90 calendar days to make a claim with their financial institution that there is no Payor's PAD Agreement, and 10 business days for other eligible reasons. |
Cash Management PAD |
Special agreement
An AccèsD Affaires advisor can help you with this choice. |
Funds Transfer PAD |
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Fixed or variable amount
The Payor's PAD Agreement must specify whether the debits are for a fixed or variable amount, or both, and any conditions that apply to the amounts.
The business must provide a written notice of the date and the amount to be debited at least 10 calendar days before the due date of the first PAD. For variable amounts, the notice is required prior to each debit. The payor can waive this notification in the Payor's PAD Agreement or in a separate document. This does not apply to one-time (or single) PADs, since a new Agreement must be created for each such PAD. The model Payor's PAD Agreement documents made available by Desjardins contain a specific statement to that effect.
Timing
The Payor's PAD Agreement must set out the timing for the pre-authorized debits, which may occur at set intervals or may be sporadic or one-time.
Pre-authorized debits at set intervals
Pre-authorized debits that occur at set intervals take place at specified, set or predictable periods or dates, or upon the occurrence of criteria or events that are set out in a Payor's PAD Agreement.
Rule H1 now contains an expanded definition of set interval, under which the period between the PADs may vary, as long as the circumstances triggering a PAD are clearly defined in the Payor's PAD Agreement.
Example: Payors may agree to a PAD each time their service fees, e.g., for their cell phone, reach a certain amount. If they agree, payors must understand that they will not receive a pre-notification unless provided by the service provider.
Sporadic pre-authorized debits
These pre-authorized debits occur occasionally, irregularly, intermittently, infrequently and not at set intervals.
One-time pre-authorized debits
Pre-authorized debits occur once, on a set date. One-time PAD Agreements allow for a single withdrawal only. They are automatically terminated once the payment is made. Any other PAD transaction requires a new Agreement.