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ARTICLE · 05 OCTOBER 2022

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Amendments To Pre-Authorized Debit (Pad) Agreement Requirements In Canada

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After a public consultation earlier this year, the anticipated amendments to the Canadian Payments Association's (operating as Payments Canada) Rule H1 – Pre-Authorized Debits...

CanadaFinance and Banking
Suhuyini Abudulai
Suhuyini Abudulai
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After a public consultation earlier this year, the anticipated amendments to the Canadian Payments Association's (operating as Payments Canada) Rule H1 – Pre-Authorized Debits (PADs) (Rule H1) came into effect on October 3, 2022.

Rule H1 requires a signed, written authorization from the payor of an obligation before issuing a pre-authorized debit against the payor's deposit account at another financial institution. Businesses debiting a customer's Canadian bank account (for personal or a business purpose) must have compliant PAD authorization agreements. The authorization agreement (i.e., the PAD agreement) must satisfy content requirements stated in Rule H1.

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