Merchants in Canada no longer need to adhere to a 3-day payment delay to get funded on Canadian PAD/ACH payments

The Canadian Payments Association (CPA) has released amendments to Rule H1, which governs pre-authorized debit (PAD) payments. PADs are a type of payment where the funds are transferred from one bank account to another on a pre-determined schedule. The CPA's amendment seeks to improve the customer experience with PADs by introducing new features and clarifying certain aspects of the rule.

What's changing?

The Amendments reflect considerable technological and payment advances that will make it easier for merchants and customers to understand their PAD obligations and enhance their overall experience of processing a payment.

The distinction between electronic and paper PAD agreements has been removed. Previously, Rule H1 required PAD agreements entered into electronically to additional verification requirements, including a minimum three-day lag before the first PAD. Now, all PAD agreements will be subject to the same rules

The requirement to send a confirmation to the payor before the first debit has been removed, as well as the additional verification requirement to verify the personal and/or banking information of the payor.

“One-Time” PADs must be defined and prohibit additional transactions under one-time agreements; If a customer executes a one-time PAD, the agreement will now automatically terminate once the payment is completed. This means the merchant will be required to obtain a new PAD agreement for any subsequent PAD.

The definition of “Commercially Reasonable” has been clarified which refers to the security procedures undertaken to verify a person’s identity in order to promote more flexibility in verification procedures​​​​​

How this is impacting your service?

UTA will update your account to remove the 3-day payment delay so that a debit can be initiated immediately after processing your payment. Please note that you are still required to receive a copy of the PAD agreement so that a debit can be made immediately thereafter. This is a welcome change that is more in line with a digital payments framework.

Will this update require us to complete any modifications or system changes?

This update will occur seamlessly behind the scenes and requires no further action on your part.