Here is what an ADP agreement looks like, as well as the necessary elements, as presented by the Canadian Payments Association: the agreement should contain instructions for cancellation. If this is not the case, the client must notify the accountant in writing and keep a copy for his recordings. You can use the type demolition form in the H1 rule, but you don`t have to. Revocation of a PAD contract does not cancel the goods or services contract between you and your client and does not terminate an amount owed to you. With the termination of the PAD contract, the customer only indicates that he no longer wants to pay by PAD. You must enter into other agreements with you to pay the amounts due. For variable fixed-interval ADP amounts (p.B months), the customer must be notified at least 10 days before each payment, unless both parties have agreed to shorten or waive this „pre-registration period“ in the payer`s PAD agreement. The waiver must be prominently presented in a paper agreement (z.B in bold, highlighted or underlined) or explicitly communicated in the case of an electronic agreement. Here are three ways to verify your client`s identity if you accept electronic ADP agreements.
For paper agreements, it is a good idea to keep at least one year from the final date of the agreement. In the case of corporate ADPs, a company has 10 days from the date of payment to declare a false or unauthorized pre-authorized charge to its financial institution. If there is no agreement between the company and the accountant, the company has 90 days to report the problem. Ok, now that we`ve taken care of it, we`re going to dig into the chords! In late 2007, the Canadian Payments Association (CPA) introduced new requirements for ADPs, following a comprehensive review of the current „pre-authorized levy“ (ADP) processing framework through the Canadian clearing system in late 2007. The CPA is responsible for the development and implementation of rules for clearing and settling payments between its member financial institutions. The revised „H1 Rule“ provides a more flexible framework for the implementation of electronic PADs (i.e. via the internet and telephone) and introduces binding elements for Payor`s ADP agreements, which allow distributors to account for accounts receivable. Although Rule H1 applies only to financial institutions that are members of the CPA (i.e. most Canadian banks), it applies to a foreign merchant who is considering going to the account of a Canadian client held at a financial institution that is a member of the CPA. The revised H1 rule allows the creation of PADs online and over the phone through the introduction of a more flexible standard for authorization and authentication.
Under the previous rule, a Payor-PAD electronic agreement required authentication with a secure electronic signature (Secure Electronic Signature, SES). Based on federal interpretations of what constituted a valid SES, many organizations have complained that this standard should be implemented in a rigid and impractical manner for electronic PADs. Under the revised H1 rule, merchants are now required to use a „commercially reasonable“ security process when verifying the customer`s identity and personal and/or banking information when creating a Payor PAD agreement electronically.