Pre-Authorized Debit (Practice Better Payments)

Because bank debits can take several business days to confirm, they may not be ideal if you need to deliver services immediately.

⚠️ Bank Debits for Practice Better Payments is currently in an Early Access Program and is not yet available for all users.  

The bank debits supported through Practice Better Payments include ACH Direct Debit (ACH), Pre-Authorized Debit (PAD), SEPA Direct Debit, Bacs Direct Debit (UK), BECS Direct Debit Australia, BECS Direct Debit New Zealand. 

Review the parent article for an overview and links to each respective payment method article. 

In this article:

• Pre-Authorized Debit Processing Fees
• Timing of Payouts (deposits)
• Storing Pre-Authorized Debit Payment Details
• Pre-Authorized Debit Mandates
• Failed Pre-Authorized Debit Payments
• Disputed Pre-Authorized Debit Payments
• Mitigating Pre-Authorized Debit Disputes
• Refunding Pre-Authorized Debit Payments 
• Disabling Pre-Authorized Debit Payments 
• Re-enabling Pre-Authorized Debit Payments

Pre-Authorized Debit (PAD) enables Practice Better practitioners located in the US and Canada to process bank debits from clients with a Canadian bank account using the Automated Clearing Settlement System (ACSS), which is provided by Payments Canada.

PAD payments are best for large or recurring charges to minimize payment failure rates (PADs on Stripe have a 98% payment success rate) and lower transaction costs. 

Pre-Authorized Debit Processing Fees

Timing of Payouts (deposits)

Standard payouts from PAD transactions will be deposited into your business bank account 5 business days from the initial transaction date. 

Here’s a visual representation of how settlements work for PAD transactions:

T = Transaction date

+# = Business days since transaction date 

💡 You can view all your payouts from the Payments & Disputes section of your Payments Dashboard in Practice Better or via the Stripe dashboard. 

Storing Pre-Authorized Debit Payment Details

There are three ways to securely store your clients’ PAD details for future payments:

Method 1: Require billing information at booking:

• Edit Service > Advanced Options > Require billing information when clients book this service/package.

Method 2: Opt to save billing information for future payments on invoices:

• Invoice Editor > Payment Options > Save billing information for future payments. 

Method 3: Ask your clients to enter their banking details in the Client Portal.

• Client Portal > Invoices & Billing > Billing Information. 

Pre-Authorized Debit Mandates

Before you can take payments directly from a client’s bank account using PAD, you need their permission. This permission is called a mandate, and it explains the terms of the payment. 

Payments Canada rules require that you notify your clients when a mandate is established and each time a debit is made on their account. By default, Stripe automatically sends these emails to your clients on your behalf.

When you process PAD payments through Practice Better Payments, your clients will automatically be shown the required mandate during checkout. This appears only the first time they add their bank account. Clients must review and accept the mandate before completing their payment using this method.

Your clients agree to the terms outlined in the ACSS Authorization - Pre-Authorized Debit Agreement, which explains their consent and authorization for PAD payments.

You can view a client’s mandate ID in your Stripe Dashboard:

1. Go to Customers.
    
2. Search for the client’s name.
    
3. Select their bank payment method to view the associated mandate ID.

Mandate and Microdeposit Emails

To comply with Payments Canada network rules, your clients must be notified when a mandate is created and each time a debit is made on their account. If your client provides a billing email address, Stripe automatically sends them this information by email.

These emails include:

• Details about the mandate, including the agreement date, the client’s institution number, transit number, account number, name, and email.
• A notification and link to a secure, hosted microdeposit verification page, if your client did not complete the Instant Bank Verification flow. 

Instant Bank Verification and Microdeposit Verification 

When your clients opt to use PAD to make a payment, they are required to verify their bank account either by completing the Instant Bank Verification flow or a Microdeposit Verification to confirm account ownership. Completing this verification helps mitigate fraud risks by confirming that the person attempting to pay you through a bank account is the authorized account holder. 

When your client chooses to use Instant Bank Verification after adding their banking details, they will be prompted to (1) select their bank from a list, (2) log into their bank account through a secure interface, (3) select which account to use, (4) authorize the connection (verification completes immediately) and (5) agree to the PAD mandate, which authorizes the payments from their account. 

When your client chooses to use Microdeposit Verification after adding their banking details, one or two small deposits ($0.01–$0.99) are sent to their bank account. These typically arrive within 1–2 business days and appear with the descriptor “ACCTVERIFY” (NACHA requirement). Once the microdeposits arrive, your client should open the email they received when they first entered their bank details (see Mandate and Microdeposit Emails section above), click the verification link, and enter the deposit amounts on the hosted page. Your clients have 10 days to complete verification. 

Example of verification page:

Failed Pre-Authorized Debit Payments

PAD payments can fail at any time after a payment is initiated, even after payment confirmation. Common reasons for a failure include:

• Insufficient funds in the client's bank account
• Invalid account number
• The client disabling debits from their bank account

If a payment fails after funds have already been added to your Stripe balance, Stripe will immediately remove the funds from your account.

In rare cases, Stripe may receive a failure notification from the bank after a payments has already succeeded. When this happens, Stripe automatically creates a dispute with one of the following reasons:

• Insufficient_funds
• incorrect_account_details
• bank_cannot_process

Stripe also applies the failure fee in these situations. 

Disputed Pre-Authorized Debit Payments

💡 You can monitor disputes in the Payments Dashboard.

Your clients can dispute a PAD payment through their bank on a “no questions asked” basis for up to 90 calendar days after a debit on a personal account or up to 10 business days for a business account. The client’s bank can honour any dispute within this period. 

Disputes submitted within these timeframes are final and can’t be contested or reversed by providing additional evidence, unlike credit card chargebacks. If a dispute occurs, you’ll need to contact your client directly to resolve the issue. 

When a dispute is created, the disputed amount and the associated dispute fee are automatically deducted from your Stripe balance. 

⚠️ Important: If you issue a refund while the client's bank is also processing a dispute, your client may receive two credits for the same transaction — one from your refund and one from their bank. To avoid this, please review the Refunds section below before taking action.

Mitigating Pre-Authorized Debit Disputes

If you accidentally charge your client, contact them right away to help avoid a potential dispute. Because PAD payments have longer settlement times and are processed differently by banks, there can sometimes be confusion between you, your client, their bank, and Stripe. 

For example, your client might reach out to both you and their bank about the same payment. If you proactively issue a refund while their bank also initiates a dispute, your client could receive two credits for the same transaction — one from your refund and one from their bank. 

To prevent this, make sure to communicate clearly with your client about refund timelines and status before taking action.

Refunding Pre-Authorized Debit Payments 

Refunds for PADs must be submitted within 180 days of the original payment date. Refunds typically take at least three business days to process, and Stripe waits for the original payment to fully succeed before submitting the refund.

Stripe doesn’t explicitly label PAD refunds as “refunds” when returning funds to your client’s bank account. Instead, the refund appears as a credit that includes a reference to the statement descriptor from the original payment.

When issuing a refund, you should let your client know immediately that the refund typically takes three business days to arrive in their bank account.

Disabling Pre-Authorized Debit Payments 

If you do not wish to accept PAD transactions, you can disable this payment method by following these instructions:

1. Log in to Practice Better. 
    
2. Click on your Settings (gear icon) and select Payments Dashboard.
    
3. Click View in Stripe near the top-right.
    
4. After successfully logging in to Stripe, click the Settings (gear icon).
    
5. Select Payments from your Settings page.
    
6. Go to the Payment methods tab.
    
7. Locate the payment method (ie. Bank debit) in your list and click on it to expand the payment method panel. 
    
8. Click Turn off on the payment method you no longer want to accept.Log in to Practice Better 

Re-enabling Pre-Authorized Debit Payments

If you have disabled Pre-Authorized Debit Payments and need to re-enable this, follow steps 1-7 above, and click the button to Turn on your desired payment method.