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Pre-Authorized Debit (PAD) Agreement

What is PAD?

PADs are a convenient way to make payments automatically. Instead of sending a payment, a company withdraws funds from your bank account.

In order to pay an organization by PAD, you'll need to complete an agreement with them. As part of the agreement, you provide your banking information. The biller may ask for a blank cheque to confirm your account information. In this case, write "VOID" in ink across the front of the check, and don't sign it.


You should keep a copy of the agreement or confirmation for your reference.

In addition, remember to check your bank account regularly to make sure the withdrawals match what you approved in the agreement.

Mandatory Elements of PAD

The mandatory elements that need to be in each pre-authorized debit agreement are below.

  1. The date of the agreement and your signature
  2. Your authorization
  3. The PAD category
    • Personal (ex.s mortgage, rent)
    • Business (used for a business activities like supplies, lease)
    • Funds transfer (ex.s registered retirement savings plan contributions)
  4. The amount to be withdrawn if it's fixed or a statement that it varies (like a usage-based utility bill) – if the amount varies, the biller must notify you at least 10 days before they withdraw the funds unless you agree to waive or shorten this period.
  5. The frequency of the withdrawals – for example it could be at a set date, weekly, monthly, or annually. It can also vary, for example, you could be billed each time you make a purchase. If the withdrawals are irregular, you need to approve each one.
  6. Instructions on how to cancel the agreement
  7. The biller's contact information
  8. Information on your recourse rights

You have 90 days from the date of the withdrawal to report an incorrect or unauthorized pre-authorized debit to your financial institution.

If you don't have enough funds in your account to cover a withdrawal, the biller can try the same debit one more time. The biller needs to do so within 30 days from the date of the withdrawal and it must be for the exact same amount.

Cancel PAD Agreement

The agreement should specify instructions for cancellation. If not, notify the biller in writing and keep a copy for your records. The biller must cancel the agreement within 30 days of the notice.

Once cancelled, check your account to confirm that the withdrawals have stopped. If they continue, contact the biller. You can also seek reimbursement through your financial institution within 90 days.

Cancelling your pre-authorized debit agreement doesn't cancel your contract for goods or services with the biller, or any amount owed. The cancellation ONLY applies to the payment method.