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ARTICLE · 28 OCTOBER 2022

Payments Canada Hits Refresh On Pre-Authorized Debit Framework With Updates To Rule H1

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Payments Canada recently authorized changes to Rule H1 for Pre-Authorized Debit (PAD) agreements. The changes, effective October 3, 2022 (and to be incorporated by December 31, 2023)...

CanadaCorporate/Commercial Law
Darcy Ammerman
Darcy Ammerman
Adelaide Egan
Adelaide Egan
Eric B. Friedman
Eric B. Friedman
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Payments Canada recently authorized changes to Rule H1 for Pre-Authorized Debit (PAD) agreements.1 The changes, effective October 3, 2022 (and to be incorporated by December 31, 2023), implement the eight proposals from Payment Canada's 2021 consultation paper,2 which we previously reviewed.

Proposal 1: Clarify the definition of "Commercially Reasonable".

The updated definition of Commercially Reasonable Methods allows a Payee to use any procedure(s) for verifying a Payor's identity that are "reasonable and appropriate, having regard to the methods of verifying identity in general use for similar types of business and payment applications, and other commercial circumstances of the Payor and Payee."

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The foregoing provides only an overview and does not constitute legal advice. Readers are cautioned against making any decisions based on this material alone. Rather, specific legal advice should be obtained.

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