How to Process Sporadic and Set Intervals ACH Direct Payments (Pre-Authorized Debits – PAD)

The timing of ACH Direct Payments (Pre-Authorized Debits – PAD) may occur with Sporadic frequency or at Set Intervals.

Sporadic PADs occur occasionally or irregularly or intermittently or infrequently or periodically and not at specified or set or predictable periods or times.

Sporadic PADs require a Payor Authorization Agreement that indicates the amount and timing of such debits to be “sporadic”. Also, you are required to obtain an authorization from the payor for each and every PAD prior to it being processed. Sporadic PADs may debit variable amounts or fixed amounts.

Set Intervals PADs occur at a specified, set or predictable periods or times. A Payor Authorization Agreement that indicates the timing and whether the PAD is for a fixed or variable amount, or both is required.

For PADs recurring at Set Intervals for fixed amounts, you must provide your customer with written notice of the amount and date of the debit. This notice must be provided at least 10 calendar days before the due date of the first PAD or before an annual top-up or adjustment. Such notice must be given every time there is a change in the amount or payment date.

For PADS recurring at Set Intervals for variable amounts, you must provide your customer with written notice of the amount and data of the debit. This notice must be provided at least 10 calendar days before the due date of every PAD.

When Pre-notification is Not Required

Pre-notification is not required for changes in the amount of fixed or variable PADs recurring at Set Intervals if your customer requests the change. However, this condition must be documented in the Payor's Authorization Agreement.

Upon mutual agreement between yourself and your customer, pre-notification may also be modified or waived. This must also be documented, either in the Payor's Authorization Agreement or by a separate waiver.

Refer to the Payments Canada Rule H1, Pre- Authorized Debits (PADs) for more information on pre-notification.