CPA requirements for pre-authorized debits

CPA requirements for pre-authorized debits

The Canadian Payments Association (CPA) has made important changes to Rule H1 regarding pre-authorized debits (PADs). The changes include new requirements for financial institutions and PAD issuing companies, as well as improvements to payors’ rights.

As a pre-authorized debit issuing company, you must comply with the new CPA requirements if you wish to offer your clients direct withdrawal services.

Responsibilities and obligations with regard to debits are set forth in Rule H1 – Pre-Authorized Debits (PADs) by the Canadian Payments Association and in the Caisse populaire Direct Withdrawal Service Agreement.

Please read the information made available to you in this section and contact an AccèsD Affaires advisor at your Caisse populaire to update your Direct Withdrawal Service file (Pre-Authorized Debit).

Two mandatory documents

1- Direct Withdrawal Service Agreement

You must sign the Direct Withdrawal Service Agreement (Pre-Authorized Debit) with your C aisse populaire.

For existing users, this new agreement will replace provisions relating to Direct Withdrawal in Appendix II of your current AccèsD Affaires Registration Agreement (Direct Deposit and Withdrawal Data Transmission). It will be forwarded to you when you contact an AccèsD Affaires advisor to update your file.

2- Payor’s PAD Agreement

You will have to prepare and give effect to a Payor’s PAD Agreement to present to your customers.

This is a form, commonly called Direct Withdrawal Authorization, that your customers must fill out to authorize a pre-authorized withdrawal or debit from their account.

This Agreement is commonly presented in paper version and must include the mandatory information elements set out in Rule H1 and specified in your Direct Withdrawal Service Agreement. It is also possible to prepare an electronic Payor’s PAD Agreement (Internet, e-mail, telephone), as long as it meets the same requirements.

Terminological equivalence

The following table shows certain equivalencies between the terms used in your Caisse populaire documentation and those used by the Canadian Payments Association.

Terms used by the Caisse populaire Terms used in the Canadian Payments Association Rule H1
PAD issuing company or PAD issuing organization Billers or Payee (of PAD)
Direct Withdrawal Service Agreement Payee Letter of Undertaking
Caisse populaire and AccèsD Affaires Sponsor member (financial institution member of the Canadian Payments Association that sponsors a payee)
Financial institution that holds the payor’s account Processing institution Processing member (financial institution member of the Canadian Payments Association that processes the PAD)


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