---
title: "Pre-authorized debit (PAD) meaning: Canada's direct debit"
description: "A pre-authorized debit (PAD) is Canada's direct debit: a signed PAD agreement, 10-day advance notice, and 90-day reimbursement rights under Rule H1, explained."
lastModified: "2026-08-27"
wordCount: 363
url: https://qualyhq.com/glossary/pre-authorized-debit
---
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# Pre-authorized debit (PAD)

> A pre-authorized debit (PAD) is Canada's direct debit: a signed PAD agreement, 10-day advance notice, and 90-day reimbursement rights under Rule H1, explained.

**A pre-authorized debit (PAD) is Canada's form of direct debit: the payer signs a PAD agreement, and the school or agency collects from their Canadian bank account on the agreed schedule, under Payments Canada's Rule H1. The rule is strict on paperwork — identity checks at setup, and written notice to the payer at least 10 days before the first debit unless the payer waives it.**

PAD is the paperwork stickler of the direct debit family, and the paperwork is the point. Rule H1 wants a valid **PAD agreement** (paper or electronic), "commercially reasonable" verification of who is signing, and — the step that catches schools — **pre-notification**: the payer must be told the amount and date at least 10 calendar days before the first debit, unless they explicitly waive it in the agreement. Skip these and the debits still process; you've just converted every future dispute into a loss.

The payer protections are generous. A personal payer has **90 calendar days** to ask their bank to reimburse a debit that didn't match the agreement (a business gets about 10 business days), and the bank returns the money first, then lets you argue. A bounced PAD can be re-presented **exactly once, within 30 days, for the identical amount** — one retry, not a retry campaign. Settlement runs roughly three to five business days.

In practice: a college collecting a CAD 9,000 year as three CAD 3,000 term instalments gets a cheap, predictable collection from any Canadian account — as long as the agreement, the identity check and the 10-day notice actually happened, and someone kept the records.

One confusion worth killing: PAD is not Interac e-Transfer. Interac is a push — the student sends each payment by hand. PAD is the standing permission that lets the school pull. The full setup checklist, retry rules and dispute mechanics are in [PAD for Canadian tuition](/blog/pad-pre-authorized-debit-tuition-canada.md), with the international comparison in [the direct debit guide for schools](/blog/direct-debit-for-schools-complete-guide.md).

*Reviewed July 2026.*

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