• Deborah

Released on November 17, the Consultation Paper seeks to review the Pre-Authorized Debits (PADs) framework as set out in Payments Canada’s Rule H1.

Proposed policy changes include

  • Updating the definition of ‘Commercially Reasonable’ to provide more clarity to Payees and Members

  • Introducing one Payor PAD Agreement in lieu and place of the current two different types of Payor PAD Agreements (Electronic Agreements and Paper Agreements)

  • Requiring Payee to use a goods and services agreement that will be distinct from the Payor PAD Agreement, with the mandatory requirement that if the goods and services agreement has been cancelled by the Payor, the Payor PAD Agreement will be subject to automatic termination

  • Updating the rules related to one-time PADs. The one-time PAD definition will also be subject to changes

  • Updating the Payee Letter of Undertaking to outline what type of information a third-party/Payment Service Provider must ensure their client includes in the Payor PAD Agreement

  • Modifying Rule H1 Appendix II to integrate the jurisdiction of Payor PAD Agreements and clarify the requirement for authorization for Funds Transfer PADs from a joint bank account

  • Adding requirements for Payee-initiated cancellation of a PAD Agreement

  • Allowing recorded submission of Business PAD reimbursement claims

Rule H1 sets out the procedures for the Exchange for the purpose of Clearing and Settlement of PADs that are supported by an ongoing agreement between a Payor and/or a Payee.


Interested parties should provide their feedback by January 14, 2022 to consultation@payments.ca


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