Payments Canada Amends Pre-Authorized Debit Agreement Requirements In Canada

The current framework for processing pre-authorized debit agreements ("PADs") is through Payments Canada's ACSS Rule H1 (Pre-Authorized Debits) ("Rule H1"), which outlines the procedures to clear and settle PADs under an ongoing agreement between a Payor and a Payee.

Following a public consultation conducted by Payments Canada earlier this year (which we discussed in an earlier blog post), amendments to Rule H1 came into effect on October 3, 2022 (the "Amendments"). The Amendments reflect considerable technological and payment advances that will make it easier, according to Payments Canada, for users to understand their PAD obligations and enhance their overall experience.

There will be a transition period whereby Payees will have until December 31, 2023 to comply with the revised Rule H1. During the transition period, both versions of Rule H1 will be applicable and Payors will be able to comply with either version. The version prior to October 3, 2022 can be