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Pre-Authorized Debit Canada

Accept Pre-Authorized Debit Canada (PADs Canada) payments with your online payments integration.

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Learn about payments in Canada on the Payments Canada website.

Pre-Authorized Debit (PAD) is a popular payment method used in Canada as an alternative to credit and debit cards. A PAD involves a shopper giving a business permission to withdraw funds from their bank account. PADs are often used for recurring payments, such as monthly subscriptions, utility bills, or membership fees. One-off payments are supported too, but due to the risk of chargebacks, we do not recommend using PADs for one-off payments.

The payments are processed through the Automated Clearing Settlement System (ACSS), which is an electronic network provided by Payments Canada for processing financial transactions.

To accept PADs, you must have a registered business entity in Canada.

Payment type Payment flow Countries Currencies Recurring Refunds Partial refunds Multiple partial refunds Separate captures Partial captures Multiple partial captures Chargebacks
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Getting a mandate from the shopper

Before you can initiate a PAD, regardless of whether it is a one-off payment or a recurring payment, you must get a mandate (consent) from the shopper and save it in your system. This mandate is called a PAD agreement. It is your responsibility to obtain the PAD agreement.

At a minimum, the PAD agreement must include:

  • Your business contact information.
  • The date of acceptance of the PAD agreement.
  • The type of PAD: personal or business.
  • A statement, accepted or signed by the shopper, that the shopper agrees your business is authorized to debit the specified bank account.
  • The details of the bank account to be debited.
  • Payment schedule or triggers.
  • If you are going to issue a PAD immediately after the PAD agreement is accepted: a statement that the shopper waives the confirmation period.
  • If you are not going to send pre-notifications for PADs: a statement that the shopper waives pre-notification.
  • Information about the right to get a refund of unauthorized debits. The exact text is prescribed by Payments Canada.
  • Information about how to cancel the agreement.
  • A statement that PADs will be processed by Adyen.

For the details, see Payments Canada's Rule H1, Pre-Authorized Debits (PADs)

Chargebacks

Canadian Pre-Authorized Debits do not have real-time authorizations. This means there is a risk of transactions being reversed if, for example, the bank account has insufficient funds. Additionally, the shopper can initiate a chargeback up to 90 days from the initial date of the direct debit on personal accounts and 10 days on business accounts.

You cannot defend PAD chargebacks. Depending on the reason code, it may be allowed to retry the payment.

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