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Online Policy Statement
  1. Payments Canada Amendments

Payments Canada Amendments to Rule H1 affecting your Customer Automated Funds Transfer (CAFT) Originator(s)

Payments Canada has made amendments to Rule H1, Pre-Authorized Debits (PAD), effective December, 31, 2023, which may apply to you.

Please read the summary of amendments below to ensure that your PAD agreements for your customers are updated to reflect the changes to Rule H1. For more information about mandatory fields and to view sample PAD agreements, visit the Payments Canada website.

Summary of amendments to Rule H1:

 Amended section:   Description:
Removal of the distinction between electronic and paper PAD agreements
  • Updated to create uniform requirements applicable to all PAD agreements.   
Default Notice Periods
  • Updated to include a new process for waived or reduced notification periods. 
  • Default Notice period is 10 calendar days. 
One-time PADs only permit a single PAD 
  • One-time PAD agreements now automatically terminate once the payment has been completed; any subsequent PAD transaction(s) require a new agreement. 
  • Revised definitions of “Authorization” and “Commercially Reasonable Methods” 
Revised definitions of “Authorization” and “Commercially Reasonable Methods” 
  • “Authorization” now simply refers to the consent or agreement, in accordance with applicable law, of a Payor whose identify has been verified by Commercially Reasonable Methods. 
  • “Commercially Reasonable Methods” allows a Payee to use procedures for verifying a Payor’s identity which are reasonable and appropriate, having regard to the particular circumstances of the PAD and the business between the Payee and Payor.
Payee-Initiated cancellation of PAD
  • Amended requirements for Payee-initiated cancellation.
  • A Payee is allowed to terminate a Payor’s PAD in accordance with the terms of the agreement.
  • If the agreement does not address termination by the Payee, the Payee will be permitted to terminate the agreement with authorization from the Payor or by providing at least 30 calendar days’ written notice.