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
Personal PAD
  • The payor is a consumer.
  • This type of PAD is used to pay for goods and services.
  • Examples: mortgage payments, insurance premiums, utility bills, membership fees, loans, credit card bills, charitable donations, and investment contributions to companies that are not members of Payments Canada.

Recourse rights and claims

Payors 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calendar days to make a claim with their financial institution that there is no Payor's PAD Agreement, if the Agreement was revoked, if the PAD does not comply with the Agreement or if the payor did not receive the pre-notifications specified in the Agreement.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
  • The payor is a business.
  • This type of PAD is used to pay for goods and services related to business or commercial activities.
  • Examples: payments between businesses and suppliers, franchisees and franchisors or dealers and manufacturers.
  • Business PADs should be identified by transaction codes 700 to 749, as specified in the User Guide and in Payments Canada's Standard 005 (PDF, 149 KB) - External link..

Recourse rights and claims

Payors (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
  • Users are businesses or closely related businesses.
  • This PAD type is used to consolidate or reposition funds between accounts held at different financial institutions.
  • It should be identified by transaction code 420 or 717, as specified in the User guide and in Payment Canada's Standard 005 (PDF, 149 KB) - External link..

Special agreement

  • You can use the standard Enrolment Agreement and arrange Business PADs with a Payor's PAD Agreement among the various entities.
  • You can use the special Cash Management PAD Agreement, which requires each entity's signature, but a Payor's PAD Agreement is not required.

An AccèsD Affaires advisor can help you with this choice.
Funds Transfer PAD
  • Only a financial institution can issue this type of PAD.
  • It's used to transfer funds between accounts held in the name of the same person with different Payments Canada member institutions.

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.