EFT Rails

PAD agreement template

Fill in the form, download the agreement your customer signs before you collect a pre-authorized debit, and see what each part of it is for.

What EFT Rails does

You hold the pre-authorized debit (PAD) agreement with your customer and send the confirmation and pre-notification notices. EFT Rails collects the debits you create in the dashboard or through the API.

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How to use the form

Fill in the form and download the agreement for your customer to sign or approve. Have your bank review your form or telephone script before you use it, and after you change it, so it can check the required parts.1

The agreement can be written or otherwise recorded. An electronic document counts as written when your customer controls it, it is substantially the same as a paper copy, and its information is available on request.2

Agreements authorized and in effect before December 31, 2023 do not need updating to match the current agreement requirements. Where one conflicts with Rule H1, the rule applies.3

Sources (3)
  1. Rule H1, section 11 ↩
  2. Rule H1, sections 5(r) and 5(w) ↩
  3. Rule H1, section 14 ↩

Fill in your agreement

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Your business
The debits
Notice to your customer
The customer optional, leave blank to fill in by hand

Pre-authorized debit (PAD) agreement

1. Parties

This pre-authorized debit (PAD) agreement is between the account holder named below ("you") and ________________.

2. Authority to debit

You authorize ________________ to debit the account identified in this agreement. You give this authorization in accordance with your account agreement with your financial institution.

3. Type of debit

These are Personal PADs, for ________________.

4. Amount and timing

You authorize a debit of ________________ ________________.

5. Notice before a debit

________________ will notify you in writing of the new amount and date at least 10 calendar days before any change to the amount or payment date, except a reduction caused by a change in tax rate.

6. Confirmation

________________ will give you a copy of this agreement, or a summary of its key terms, at least 10 calendar days before the first debit.

7. Cancellation

You may revoke your authorization at any time by giving ________________ 10 calendar days' notice. ________________ may stop issuing debits in accordance with this agreement.

You may obtain a sample cancellation form, or further information on your right to cancel a PAD agreement, at your financial institution or by visiting www.payments.ca.

8. Your recourse

You have certain recourse rights if any debit does not comply with this agreement. For example, you have the right to receive reimbursement for any debit that is not authorized or is not consistent with this PAD Agreement. To obtain more information on your recourse rights, contact your financial institution or visit www.payments.ca.

9. Changes to your account

You must give ________________ written notice of any change to the account identified in this agreement.

10. Your financial institution

Your financial institution is not responsible for checking the terms of this agreement against each debit.

11. Contact

Contact ________________ with questions, to obtain information or to seek recourse:

________________

Address: ________________

Telephone: ________________

Email: ________________

12. Account, date and signature

Account holder name: ________________

Financial institution and transit number: ________________

Account number: ________________

Date of agreement: ________________

Signature of account holder: ________________

What your agreement has to say

You can add your own terms or put the agreement inside another contract, as long as the parts below are in it.1

Who you are and how customers reach you

Give accurate contact details for every communication method you use, so your customer can ask questions, obtain information or seek recourse. Include the date the agreement is made and, for a written agreement, a place for your customer to sign.23

That your customer authorizes the debits from their account

Your customer authorizes you, under their own account agreement, to debit the account they name.4

Whether the debits are personal or business

Print the category on the agreement or have your customer mark it: personal, business or Funds Transfer PADs. Personal debits include mortgage and utility payments, while business debits include supplies and lease payments.5 See personal and business PADs compared.

How much and when, or that each debit is as needed or one-time

State whether the amount is fixed or variable and when debits occur, or clearly describe the event or action that triggers them. You can instead specify that debits are sporadic.6

A one-time agreement covers one debit and ends when that payment is fulfilled. A sporadic agreement says you must obtain your customer’s authorization for each debit. If a payment service provider collects for the business supplying the goods or services, describe that arrangement.7 Read about sporadic PADs.

How your customer can cancel

Your customer can cancel at any time by giving the notice you set, up to 30 calendar days. The agreement tells your customer that a sample cancellation form and more information are available from their financial institution or at www.payments.ca.8

Your customer’s right to their money back

The form includes the required recourse statement word for word. Every agreement needs it except two kinds of funds transfer PAD.9

Choose what else to include

For personal or business debits on a set schedule, you can promise pre-notification. You and your customer can agree to waive or shorten the pre-notification and confirmation notice periods, and that clause must stand out in bold, highlighting or underlining.10

Other choices include requiring written notice of an account change, explaining how ending the agreement or the goods or services contract affects the other, choosing governing law, explaining reimbursement claims, and stating that your customer’s financial institution does not check the agreement’s terms against each debit.11

Before the first debit

Send your customer a copy of the agreement or a summary of its key terms, called a confirmation, at least 10 calendar days before the first debit. Your customer can agree to a shorter period or waive it, and after a waiver you send it within 5 calendar days following the first debit.12

The confirmation gives the account and payment details, start date, personal or business category, and statements about cancellation and recourse, plus pre-notification for debits on a set schedule.13 See the pre-notification guide.

Keep the signed agreement

Keep the signed or recorded agreement with your records. For the rest of your setup, follow setting up pre-authorized debits.

Sources (13)
  1. Rule H1, Appendix II, "Mandatory for all" ↩
  2. Rule H1, Appendix II, "Contact Information" ↩
  3. Rule H1, Appendix II, "Date and Signature" ↩
  4. Rule H1, Appendix II, "Authority to Debit" ↩
  5. Rule H1, Appendix II, "PAD Category" ↩
  6. Rule H1, Appendix II, "Amount, Timing or" ↩
  7. Rule H1, Appendix II, "One-Time PADs"; Rule H1, Appendix II, "Sporadic PADs"; Rule H1, Appendix II, "Payment Service" ↩
  8. Rule H1, Appendix II, "Cancellation of" ↩
  9. Rule H1, Appendix II, "Recourse/Reimbursement Statement" ↩
  10. Rule H1, Appendix II, "Pre-notification"; Rule H1, Appendix II, "Waiver/Modification" ↩
  11. Rule H1, Appendix II, "Change of Account"; Rule H1, Appendix II, "Jurisdiction of"; Rule H1, Appendix II, "Validation by" ↩
  12. Rule H1, section 16 ↩
  13. Rule H1, Appendix IV ↩

Questions

What must a PAD agreement contain?

It includes the date, a signature field for a written agreement, your contact details and your customer’s authorization to debit their named account.1 It states the category, amount and timing or trigger, cancellation terms and, apart from the two Funds Transfer exceptions, the full recourse statement.2

Can a PAD agreement be signed electronically?

Yes. An electronic document counts as written when your customer controls it, its information is substantially the same as a paper copy, and the information is available on request.3

Do I need a new agreement for every debit?

A one-time agreement ends after its single payment is fulfilled. A sporadic agreement remains the basis for collection, but you must obtain your customer’s authorization for each debit.4

Can the customer cancel?

Yes, at any time, with the notice period you set up to a maximum of 30 calendar days. The agreement also tells customers where to obtain a sample cancellation form and more information.5

Do old agreements need updating?

Agreements authorized and in effect before December 31, 2023 do not need updating to match the current requirements. Where an older agreement conflicts with Rule H1, the rule applies.6

Sources (6)
  1. Rule H1, Appendix II, "Date and Signature"; Rule H1, Appendix II, "Contact Information"; Rule H1, Appendix II, "Authority to Debit" ↩
  2. Rule H1, Appendix II, "PAD Category"; Rule H1, Appendix II, "Amount, Timing or"; Rule H1, Appendix II, "Cancellation of"; Rule H1, Appendix II, "Recourse/Reimbursement Statement" ↩
  3. Rule H1, sections 5(r) and 5(w) ↩
  4. Rule H1, Appendix II, "One-Time PADs"; Rule H1, Appendix II, "Sporadic PADs" ↩
  5. Rule H1, Appendix II, "Cancellation of" ↩
  6. Rule H1, section 14 ↩

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