PAD pre-notification in Canada

What EFT Rails does

You hold the pre-authorized debit (PAD) agreement with your customer and send the notices for your debits. EFT Rails sends each debit when you create it and proceeds on the basis that you have given the required notices. Create and read payments through the API or in the dashboard, with details in the API reference.

When to tell your customer

You tell your customer before the first debit and again before a debit changes.

You can send a notice by email when your customer controls the document, it carries substantially the same information as a paper copy, and they can read it again on request.⁶

Tell your customer before the first debit

Before the first debit, send your customer their account name, financial institution and transit number, and account number. Include the payment amount, frequency and start date, and state whether the debit is business or personal. Add statements explaining how notice, cancellation and recourse work, with the notice statement required for debits on a schedule.⁷

The rule calls this written notice the confirmation. It can be a copy of the PAD agreement or a summary of its key terms.⁸

Your customer can authorize a shorter period or waive receiving it before the first debit. If they waive it, you must still provide or make it available within 5 calendar days after that debit.¹

See what to include in your PAD agreement.

Tell them again before a debit changes

Tell your customer the new amount and date before a scheduled debit changes. The rule calls this written notice pre-notification.⁹

When you give that notice, a change to a fixed or variable amount on a schedule needs no new approval. This covers a change caused by a tax rate, a top-up or another adjustment.⁵

For sporadic debits, which you collect as needed, get your customer's approval before each one. They cannot waive that approval. A one-time debit needs a new PAD agreement for any later debit.⁵

When you don't need to tell them

You do not need to send notice when a municipal, provincial or federal tax reduction lowers the debit, or when the amount changes because your customer directly asked you to change it, such as by telephone, and your PAD agreement specifically allows that exception.³

When your customer agrees to less notice

You and your customer can agree to shorter notice or none, either in the PAD agreement or through a separate waiver they authorize. A reduction or waiver clause in the agreement must stand out, for example in bold print, highlighting or underlining.¹⁰

The rule's own example for a variable amount says you will identify each amount at least 10 calendar days before each debit. It also gives examples where the customer has agreed to 5 calendar days or waived notice. Any shorter period your customer agrees to works the same way.⁷

If you don't tell them

If you didn't tell your customer when the rule required, they can claim the debit back from their bank.¹¹

The bank must accept the claim and reimburse your customer immediately on a best-efforts basis when the claim arrives up to and including 90 calendar days after a personal PAD was debited, or up to and including 10 business days after a business PAD was debited. Your bank must honour the returned debit and provide recourse for its amount.¹¹

A later claim is settled between you and your customer outside the rules, and the debit is not returned under them.¹¹ The PAD dispute windows set out those timelines.

Your customer makes the claim to their own bank with a signed declaration on the rule's form, or with a written or recorded request that the bank authenticates using its usual security measures.¹²

A personal debit returned for a missing notice carries return reason code 918. A business debit returned for the same reason carries code 921.¹³ See the full list of return reason codes.

If your business name changes, give your customer at least 10 calendar days' written notice before the next debit.¹⁴

Keep a copy of what you sent

Keep an audit trail containing the PAD agreement, evidence of your customer's authorization and everything needed to retrieve or trace a debit for at least 12 months after the last debit under that agreement.¹⁵

We recommend dating every notice by counting back from the Due Date in calendar days. Keep a copy of what you sent, where you sent it and when, with the agreement. That copy is the record that answers a claim that a notice was missed.