How To Request A Stop Payment For Pre-Authorized Debits In Canada

A common method of payment amongst Canadians is pre-authorized debits (PADs). You can set up this type of transaction to automatically pay bills, with money coming directly from your chequing or savings account. While this automation is convenient, what happens if you need to stop the payments? Maybe you’re cancelling the service, switching bank accounts, or want to start paying your bills using a credit card instead. Whatever the reason, understanding how to stop pre-authorized debits can help you maintain control over your money.

In Canada, consumers have specific rights when it comes to cancelling PAD agreements. In this guide, we’ll explain how pre-authorized debits work, outline the steps to request a stop payment, review possible fees, and discuss what to do if a withdrawal still occurs after the request.

What Is A Pre-Authorized Debit (PAD)?

As per the Government of Canada, “a pre-authorized debit allows the biller to withdraw money from your bank account when a payment is due.” When you set up a PAD, it means that you avoid manually paying a bill each month. Instead, you give the business permission to pull funds directly from your account on a specific schedule.

Canadians typically use PADs for the following:

• Mortgage payments
• Utility bills
• Insurance premiums
• Gym memberships
• Subscription services
• Loan payments
• Other recurring bills

It is important to note that PAD agreements require authorization from the account holder for the amount of the withdrawal and its frequency.

Reasons Canadians Request Stop Payments

There are plenty of reasons why someone may request a stop payment on a pre-authorized debit. For example, you may cancel a service but notice there are continued withdrawals from your chequing account. You may also switch providers, see the company debiting you the wrong amount, or even suspect a fraudulent transaction. Should that happen, you can request a stop payment to put an end to the withdrawals.

How To Request A Stop Payment For A Pre-Authorized Debit

Step 1: Contact the company first

Even if you cancel a PAD with your bank, your underlying contract with the company remains intact. This is why we recommend contacting the company directly to ensure they cancel the underlying contract as well. Most cases require written notice for cancellation of a PAD agreement.

As per Payments Canada, your original PAD agreement will have “instructions on how to cancel the agreement.” You can check this document for the next steps, though in many cases, cancelling the contract with the company also means they will cancel the PAD agreement as well. The company is required by law to “cancel the agreement within 30 days of the notice.”

Step 2: Notify your bank

If your withdrawal remains scheduled, or if the company cannot process the cancellation in time, you can request a stop payment through your bank or credit union. Most institutions allow you to visit the branch or make the request through your Canadian online banking or telephone banking.

Step 3: Confirm the stop payment

When you place the stop payment order, you will need to provide full details to your bank, as they can typically block a specific payment amount or a specific transaction detail. In order to stop the payment, they will need the following information from you:

• Your account details. Will the payment come from your savings vs chequing account?
• Company name
• Transaction amount
• Expected withdrawal date(s)
• Frequency of the transaction (single transaction or recurring)

In some cases, a stop payment only applies to specific transaction details, so future withdrawals may still occur if the payment information changes.

Tip: If possible, request written confirmation of the stop payment. Ask your bank to provide either a receipt, email, or secured message for your records.

Step 4: Monitor your account

After you submit the stop payment request, be sure to check your bank statement. Double-check that the payment does not go through on the expected withdrawal date. If it does, you can dispute the transaction and ask for reimbursement.

How Much Does A Stop Payment Cost In Canada?

Banks charge different types of bank fees in Canada, and one of those is for a stop payment on a transaction. The exact cost varies based on the institution. However, most banks charge between $12 and $30 per request, with the total amount also depending on whether it is a single transaction or multiple future withdrawals. Reach out to your bank directly or check your account agreement to confirm the cost that applies to your request.

What To Do If a Pre-Authorized Debit Still Goes Through

Did you cancel the PAD and your contract with the company? Great! But, what happens if your PAD still goes through and you see the charge in your chequing account? This can occur as the company may automatically submit the next PAD before it processes the cancellation request. If that happens, you can “report an incorrect or unauthorized pre-authorized debit to your financial institution” within 90 days.

When you report the problem, the bank may ask you to complete an additional claim form or request proof that you previously cancelled the authorization. They will then review the request and determine if you are eligible for reimbursement under their policy.

Tips To Avoid Pre-Authorized Debit Problems

While pre-authorized debits can simplify bill payments, it’s still important to understand how the agreement works and monitor your accounts. Consider the following to help reduce the risk of unexpected withdrawals or issues with cancelling your PAD:

• Keep a copy of your PAD agreement. This document outlines the payment terms as well as instructions on how you can cancel the agreement.
• Cancel services in writing when possible, as written requests can act as proof if a dispute arises down the line.
• Review your bank statement often. By checking the transactions in your account, you can quickly identify any unauthorized transactions.
• Set up banking alerts in your mobile app so you will receive a notification anytime money leaves your account.
• Limit the number of PADs you set up, perhaps restricting them to essential payments only. This will reduce the risk of unauthorized charges in the future.

Understanding how pre-authorized debits work and how to stop them when needed allows you to prevent unwanted withdrawals and maintain control over your banking setup.