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 |
Recourse rights and claimsPayors have 90 calendar days to make a claim with their financial institution if they assert that there is no Payor's PAD Agreement, if it was revoked, if the PAD does not comply with the Agreement or if the payor did not receive it or if they did not receive advanced notices pursuant to the Agreement. |
Business PAD |
Recourse rights and claimsPayors (businesses) have 90 calendar days to make a claim with their financial institution if they assert 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 set out whether the PADs are for a fixed or variable amount, or both, and any conditions that may apply to the amount.
The company must provide a written notice of the amount to be debited and the date of such debiting at least 10 calendar days before the due date of the first PAD. Where the Payor's PAD Agreement provides for variable amount PADs, said notice is required prior to each PAD. The payor may specify the waiver of notification in the Payor's PAD Agreement or in a separate document. The model Payor's PAD Agreement proposed by Desjardins contains a specific statement to that effect.
Timing
The Payor's PAD Agreement must set out the timing for the pre-authorized payments which may occur at set intervals or may be sporadic.
Pre-authorized debits recurring at set intervals
Occurring at specified, set or predictable periods or times or upon the occurrence of such criteria or events as set out in a Payor's PAD Agreement.
Rule H1 now includes an expanded definition of set interval under which the period between PADs may vary as long as the circumstances that trigger 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, the payors must understand that they will not receive pre-notification, unless provided by the service provider.
Sporadic pre-authorized debits
Occurring occasionally, irregularly, intermittently, infrequently and not at set intervals.