Pre-authorized debit (PAD) payments

Notch's PAD bank payment offers a secure and reliable payment solution that helps businesses reduce Days Sales Outstanding (DSO). By eliminating the need for paper cheques, PAD bank payment automates the accounts receivable process, streamlining payment collection. The setup process in Notch's portal is quick and easy, ensuring faster and more efficient payments for your businesses.

* Available for payments in Canadian dollars

What is PAD bank payment?

Pre-authorized debit (PAD) payments allow you as the business to withdraw funds directly from your customer’s bank account when their payment is due. PAD bank payment is especially useful for customers who frequently pay you on a regular basis. They’re a great replacement for time-consuming cheques or expensive eTransfers.

With Notch's platform, you can:

Migrate existing PAD bank payment agreements and initiate new ones
Convert physical cheques into seamless bank transfers
Automatically send PAD bank payment agreements to your customers for approval

What's the difference between PAD and EFT?

This is a common point of confusion. EFT (Electronic Funds Transfer) is a broad term that covers various types of electronic payments, while PAD (Pre-Authorized Debit) is a specific type of EFT.

The key difference between EFT and PAD lies in how the payment is initiated. EFT typically refers to a payment initiated by the payor. However, a PAD payment can be initiated by either the payor or the payee, depending on the agreement in place. For this reason, it's referred to as "merchant-initiated". With PAD, the payee can "pull" funds from the payor’s bank account, provided proper authorization has been given.

Keep in mind that setting up a PAD does not automatically enable recurring payments. You need to turn on the "Auto-Pay" option for the customers in your Notch dashboard.

Best practices:

If you already have an agreement on file—whether collected online, by email, by phone (using an approved script), or as a physical hard copy—then you're all set. If you don’t have an agreement, you can send one directly from the PAD setup prompt in your Notch dashboard. Once completed, the signed form will be stored electronically for your records.

How to set up PAD bank payment from Notch dashboard?

1. Get a void cheque or this information from your customer

2. Go to the "Customers" page in the Notch portal and click into a customer, then click the "Edit Details" button on the top right corner

3. Go the the "Payments" tab and select the "Set up CAD or US Bank Account" option

4. Enter your customer's bank account information

5. Then click the button to send your customer a digital PAD agreement

6. You will be able to process payments once your customer accepted the agreement!

The payment method status will display as "Agreement Pending" initially, and it will disappear once the customer has accepted the agreement. You also have the option to resend the agreement as a reminder for your customer.

What bank account details do I need to collect from my customers for PAD Pull?

Branch number
Institution number
Account number

What should I do if my customer wants to change their bank account details?

The best approach is to add new PAD details as a payment method, and remove the old one.

If you're setting up a brand new PAD bank account for your customers, be sure to send them a new agreement. This is an important precaution in case the customer later disputes a payment and you only have an agreement tied to their old banking information.

To ensure a smooth transition, it's recommended to make this change when there are no outstanding bills for the customer.

Benefits of Notch’s PAD bank payments

Why is Notch’s accounts receivable automation software the best for PAD bank payments?

Faster bank transfer payment processing: Process payments in T+2, not T+5, so money hits your bank account faster, and you can mark invoices as paid immediately.

Access automation features: PAD bank payments and other online payments allow you to unlock key automation features like auto-pay, automated digital invoicing, customer payment portals, surcharges, integrations, automated overdue invoice follow ups, bulk invoice uploads, and more.

No processing fees: Unlike credit cards, PAD payment is free and unlimited.

Instant reconciliation: Notch integrates with your existing accounting software and ensures all payments are closely tracked and reconciled, automatically.

Secure: PAD payment is more secure than cheque, cash, and even credit card. Notch’s platform is fully PCI compliant.