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FAQs for Payors: Paying by Pre-Authorized Debit

FAQs for Payees: Billing by Pre-Authorized Debit




FAQs for Payors: Paying by Pre-Authorized Debit


Do I need to switch banks?
No!

Is it legal?
YES. Transactions are subject to the requirements of NACHA and the Canadian Payments Association Operating Rules, Rule H1, the Electronic Fund Transfer Act and Regulation E, as promulgated by the Federal Reserve Board.

What is a Pre-Authorized Debit (PAD)?
A pre-authorized debit (PAD) is a withdrawal from your account at a financial institution (FI) that is initiated by a company or an FI that has your authority to do so. PADs are often used as a convenient way to make recurring payments to an organization or transfer investment funds on an ongoing basis. Frequent uses of PADs include mortgage and utility payments, membership dues, charitable donations, RSP investments, and insurance premiums.

The requirements for PADs are set out in the CPA’s Rule H1. Recurring charges to your credit card are not considered PADs and are thus not covered by Rule H1.

How do PADs work?
You (the Payor) make arrangements for PAD payments directly with the biller (the Payee), or in the case of a funds transfer PAD directly with the financial institution (FI) holding the account to which you want to move funds. You and the biller establish an agreement in which you authorize the withdrawals, either through a written form that you sign, or through an electronic communications channel, such as a web site or over the telephone. The agreement must specify the amount of the PAD if it is fixed or indicate that the amount will vary. It must also specify the timing, frequency or event that will result in a PAD, as well as the account from which the funds are to be withdrawn. It should also indicate the procedure for cancelling the PAD and provide contact information for the biller. (By February 28, 2010, information on the cancellation procedure and the contact information for the biller will be mandatory for all new Payor’s PAD Agreements.)

The Biller may request a blank cheque to confirm your account details and the transit number for your branch; if so, be sure to write “VOID” in ink on the front of the cheque, and do not sign it. You should keep a copy of the authorization form, or the written confirmation that you will receive from the biller (e-mail is acceptable) in the case of a PAD that you set up by telephone or Internet, for reference and check your statement or passbook regularly to confirm that withdrawals are being made in accordance with it.

What is the difference between a Personal PAD, a Funds Transfer PAD, a Business PAD, and a Cash Management PAD?
Personal PADs are used by consumers to pay companies or other organizations for goods or services.

Funds transfer PADs, on the other hand, are used to move money between accounts held by the same person at different CPA member financial institutions. Common examples include contributions to investment accounts, mutual funds and registered savings plans.Business PADs are used to pay for goods or services related to a business or commercial activity of the Payor, for example payments between franchisees and franchisors, distributors and suppliers, or dealers and manufacturers.

Cash Management PADs are used to consolidate or reposition funds between accounts held by the same business or closely affiliated businesses at different financial institutions. For example, a parent company may use a cash management PAD to draw funds from an account of its subsidiary.

If the amount or the timing of a PAD varies, how will I know how much is to be debited from my account and when?
The biller must provide you with notice of the timing and amount to be debited:

* If the amount varies (for example, monthly hydro balances), the biller must give you at least 10 days notice of the amount before withdrawing the funds, unless you agree to waive or shorten this period or you specifically request the biller to make a change.

* If the PADs do not follow a regular schedule and the situation or event that will result in a PAD is not defined in your agreement with the biller, the biller must obtain your authorization for each withdrawal from your account. Once you have signed the underlying written agreement, this additional authorization may be provided, for example, by means of a password or a secret code.

If I don’t have enough funds in my account to cover a PAD and it is returned NSF, can the biller try to debit my account again? Can they apply NSF charges to the next debit?
Under the provisions of Rule H1, if a PAD is returned due to insufficient funds, the biller may re-present the payment item only once, and this must be done within 30 days of the original transaction date. If the biller chooses to re-present the PAD that was returned NSF, the PAD must be for exactly the same amount as the original transaction (i.e. it cannot include service fees charged by the biller).

However, if the Payor's PAD Agreement provides for variable amount PADs, the Payee may add NSF charges to the outstanding balance the next time a PAD is withdrawn from the Payor's account, provided that pre-notification provisions are satisfied. Take for example a Payor's PAD Agreement that provides for variable amount PADs reoccurring on the 15th of every month; if on January 15th a PAD of $100.00 was returned NSF, the Payee would have the right to debit the account on February 15th for $200.00 plus NSF charges (i.e. for the outstanding balance plus NSF fees). On the other hand, if the Payor's PAD Agreement provides for a Fixed Amount PAD reoccurring on a fixed date (the 15th of every month), the Payee's only recourse within the clearing system would be to re-present the PAD (without NSF charges) one time only (i.e. for $100.00 in the example above) within thirty days.

If a Payee is issuing PADs that are not in accordance with the Payor's PAD agreement, the Payor should first contact the biller to resolve the issue. CPA Rule H1 specifies that if the Payor is not successful in resolving the issue with the biller, the Payor may request that their financial institution reverse the transaction and return the funds to their account. For personal PADs, the Payor has 90 days from the date of the withdrawal to report the problem to their financial institution and seek reimbursement while it is 10 days for business PADs. Once the Payor has provided the reason for the claim, the funds will be restored to their account. Please note that Rule H1 relates only to PADs as a method of payment. Reimbursement does not cancel or affect any financial obligation between the parties for goods or services obtained.

If an unauthorized or incorrect PAD caused an overdraft in my account at my financial institution, will I be reimbursed for NSF charges?
The CPA’s mandate does not extend to service fees that may be charged by financial institutions, so this is not addressed in the CPA’s Rule H1. You will need to discuss the matter with your financial institution.

How do I cancel a PAD agreement?
First, check your Payor’s PAD Agreement (the agreement in which you authorized the Payee to debit your account). The procedure to cancel a PAD should be outlined in this agreement. If no clear preference for cancellation procedure is expressed in the agreement, it is advisable to notify the biller in writing and keep a record of the cancellation. You may also use the Sample Cancellation Form provided in the CPA’s Rule H1 for this purpose, but you are not required to do so. If your PAD Agreement does not outline the cancellation procedure, and you are unable to contact the biller, you may seek the advice of your financial institution as to how to cancel the PAD. That said; this should be a last resort. Your financial institution may not be able to assist you in cancelling your PAD Agreement as the Payor’s PAD Agreement is a contract between you and the Payee.

Once the PAD has been cancelled with the biller, check your account records to confirm that the withdrawals have stopped. If the PADs continue to be taken from your account, contact the Payee and ask why. If you are not satisfied with the response that you obtain from the Payee, you may seek recourse through your financial institution.

It is important to note that cancelling your PAD Agreement or seeking recourse through your financial institution does not negate your contractual obligations to the Payee. By cancelling your PAD Agreement, you are simply notifying the Payee that you no longer wish to pay by PAD.

What happens if a PAD is processed to my account incorrectly?

You should inform your biller immediately if any withdrawal from your account is not in accordance with the terms of your agreement (e.g. different amount or date), or processed after you have cancelled the agreement.

If you are not successful in resolving the issue with the biller, or if the PAD was originated by a biller with whom you do not have an agreement, you may request that your financial institution reverse the transaction and return the funds to your account, subject to the time frames below. (This provision may not apply if you are transferring funds to another account you hold at a different CPA member financial institution. Ask the financial institution that will receive the funds, or check the agreement you signed.)

* For personal PADs, you have 90 days from the date of the withdrawal to report the problem to your financial institution and seek reimbursement. Once you have provided the reason for your claim, the funds will be restored to your account.

* For business-related PADs, if there is no contract between your business and the biller, you have 90 days from the date of the withdrawal to report a problem to your financial institution and seek reimbursement. Any other discrepancies (e.g. incorrect amount) must be reported to your financial institution within 10 business days.

* If a business uses PADs for cash management purposes (e.g. to withdraw funds from the account of an affiliate or subsidiary), the financial institution will reverse a PAD only if no agreement exists between the two entities and the problem is reported within 90 days of its occurrence.

It is important to note that reimbursement applies only to the payment itself; it does not cancel or affect any financial obligation between the parties for goods or services obtained.

Can a Biller change the amount of a PAD?
If it is a fixed amount PAD agreement, no Authorization is required for any change in the amount of the PAD if Pre-notification is provided in writing at least 10 days before each and any change in the amount of a PAD.

What happens if I want to change the account to which PADs are processed?
You should immediately advise the biller (or your FI in the case of a funds transfer PAD), if there is a change of information relating to your account (e.g. account number, type of account, financial institution). Failing to do so may cause a PAD to be processed against y our original account.

If you are asked for a blank cheque to confirm the new account details, be sure to write “VOID” in ink on the front of it, and do not sign it.

How do I find transaction responses using the Internet?
Log on to EFT Canada's website using any computer with Internet access and using the drop down menu from the online Reporting Module choose Transaction or Response report.

What is a Rolling Reserve?
An amount held to guarantee transactions. The amount varies for each merchant, dollar transaction and volume. The amount, determined by EFT Canada's Risk Management Department, is not applicable to all accounts.

How much is the discount rate?
As low as 0%. Contact an Account Executive for details.

Is there a minimum transaction volume or a minimum amount of transactions required per month?
There is NO minimum transaction volume and NO minimum number of transactions that are required per month.

Can I "private label" the software?
This option is available to you. Contact an Account Executive for details.

Does EFT Canada offer a referral program?
YES. Please ask an Account Executive for details.



FAQs for Billers: Billing by Pre-Authorized Debit

General Questions About PADs


What is a Pre-Authorized Debit (PAD)?
A pre-authorized debit (PAD) is a withdrawal from a client’s bank account, which has been pre-authorized by the account holder. PADs are initiated at the Payee’s request by a financial institution (FI) that has agreed to provide this service. PADs are often used as a convenient way for a business to obtain payment from a client on a recurring basis, or to transfer funds on an ongoing basis (i.e. a parent company may use a cash management PAD to draw funds from an account of its subsidiary). Recurring charges to a credit card are not considered PADs and are thus not covered by Rule H1.

What is the difference between a Personal PAD, a Funds Management PAD, a Business PAD and a cash management PAD?
Personal PADs are used by consumers to pay companies or other organizations for goods or services.

Funds Transfer PADs, on the other hand, are used to move money between accounts held by the same person at different CPA member financial institutions. Common examples include contributions to investment accounts, mutual funds and registered savings plans.

Business PADs are used to pay for goods or services related to a business or commercial activity of the Payor, for example payments between franchisees and franchisors, distributors and suppliers, or dealers and manufacturers.

Cash Management PADs are used to consolidate or reposition funds between accounts held by the same business or closely affiliated businesses at different financial i nstitutions. For example, a parent company may use a Cash Management PAD to draw funds from an account of its subsidiary.

I want to offer my clients the option to pay by pre- authorized debit (PAD). Where do I start?
First, you should determine whether your financial institution offers this service to billers. If so, before offering the PAD payment option to your clients, you must sign a contractual agreement (referred to as a "Payee Letter of Undertaking" in Rule H1) with the financial institution (FI) that will process the PADs on your behalf. In that contract, you agree to follow the terms of Rule H1 and other CPA Rules as they apply to pre-authorized debits.

Before issuing any PADs to a client’s account, you must obtain the authorization of the account holder (the Payor), and this must be done using a form or process that has been approved by your FI. This authorization is referred to in Rule H1 as a Payor’s PAD Agreement. Your FI may choose to provide you with a Payor’s PAD Agreement template that meets the requirements set out in Rule H1. Any deviation from a template provided to you by your FI requires your FI’s approval.


Changes for Billers


I already issue PADs. Do the changes affect my arrangements with my bank?
When your financial institution (FI) agreed to issue PADs on your behalf, you entered into a contractual agreement (referred to as a "Payee Letter of Undertaking" in Rule H1) with the financial institution, in which you (the Payee) agreed to follow the terms of Rule H1 and other CPA Rules as they apply to pre-authorized debits.

As a result of the new requirements, FIs will work with their Payee clients to ensure that all Letters of Undertaking are updated prior to February 28, 2010. The manner in which the Letters of Undertaking are updated is at the discretion of each financial institution.

You will also need to ensure that any Payor’s PAD Agreements signed on or after February 28, 2010 contain the new mandatory requirements.

What are the new mandatory requirements for Payor’s PAD Agreements?
You need to ensure that any Payor’s PAD Agreements signed on or after February 28, 2010 contain the new mandatory requirements. Payor’s PAD Agreements signed by your clients prior to that date do not need to be updated (i.e. they are Grandfathered). NOTE: Sample Payor’s PAD Agreements are provided in Appendix II of the CPA’s Rule H1. The new requirements include:

* A statement giving the Payee the authority to debit a specific account;

* The Amount and Timing of the PAD (If the amount or the schedule is variable, the PAD Agreement must indicate this, and further requirements apply. See Sections 14, 15 (paper agreements) and 16 (electronic agreements) of Rule H1 for details.);

* The PAD Category (i.e. business, personal or funds transfer);

* The date of the agreement, and for paper agreements, the Payor’s signature;

* A statement indicating that the Payor may cancel the PAD Agreement at any time, with the minimum advance notice specified. The method of cancellation should be clearly set out within the Payor’s PAD Agreement. The lead time required to cancel the PAD before the next one is processed should be based on operational requirements; it must not exceed 30 days and should be shorter in most cases;

NOTE: Cancelling the PAD Agreement does not affect the obligations between a Payor and Payee under any broader contract for goods or services. For example, if the Payor has signed a one-year lease and agreed to make monthly payments by PAD initially, the Payor may cancel the PAD Agreement at any time but must make arrangements with the Payee for another form of payment to fulfill his/her obligations under the lease.

* A statement advising Payors that they may obtain a sample cancellation form, or further information on their right to cancel a PAD Agreement, at their financial institution or by visiting the CPA’s web site (www.cdnpay.ca);

* Payee contact information that the Payor may use to make inquiries, obtain information or seek recourse in the event of an error or improperly authorized PAD;

* The following standard statement about the recourse available to the Payor:

“You [or I/we, depending on the context] have certain recourse rights if any debit does not comply with this agreement. For example, you [I/we] have the right to receive reimbursement for any PAD that is not authorized or is not consistent with the terms of this PAD Agreement. To obtain more information on your [my/our] recourse rights, [I/we may] contact your [my/our] financial institution or visit www.cdnpay.ca.”

Additional requirements apply for variable PADs, sporadic PADs and in cases where the Payee seeks the Payor’s agreement to reduce or waive the standard pre-notification period applicable in certain circumstances as set out in Rule H1.

Do I need to get new Payor’s PAD Agreements signed by current clients?
No, Payor’s PAD Agreements in effect before February 28, 2010 are grandfathered and remain valid. However, if a Payee and/or Payor wishes to change the terms of an existing agreement after February 28, 2010, then the revised Payor’s PAD Agreement will need to comply with the new requirements.

What are the requirements for establishing electronic Payor’s PAD Agreements?
The Payee must first confirm if its financial institution offers its Payee clients the option of initiating PADs based on electronic Payor’s PAD Agreements. If so, the Payee must use a “commercially reasonable” process to confirm the Payor’s identity, personal and/or banking information when establishing a Payor’s PAD Agreement through an electronic channel, such as the Internet or the telephone. Some guidance is provided in the definition of “commercially reasonable” in Section 5 (e) of Rule H1.

Financial institutions may provide Payees with guidelines or templates for their use in establishing electronic agreements. If a Payee chooses to deviate from these , their intended process must be reviewed by its CPA member financial institution prior to implementation, to confirm that it is satisfactory and meets the requirements of Rule H1. The electronic forms, telephone scripts and/or processes used for the Payor’s PAD Agreement must include all of the mandatory elements set out in Appendix II of the CPA’s Rule H1.

The Payee must send a written Confirmation of the terms of the electronic Payor’s PAD Agreement to each Payor before the first PAD is submitted. The Confirmation must include all of the mandatory information elements set out in Appendix IV of Rule H1.

How can I confirm that my Payor’s PAD Agreement meets the new requirements?
Payor’s PAD Agreements signed prior to February 28, 2010 do not need to be updated (i.e. they are Grandfathered). Although the mandatory elements of the Payor’s PAD Agreement are not required prior to that date, billers are encouraged to begin incorporating the mandatory elements into their PAD Agreements as soon as possible. The biller’s FI may choose to provide a template for the biller to use, which contains the mandatory elements. If the biller chooses to use an agreement that differs from the template, they must have a sample agreement approved by their financial institution to confirm that it meets the requirements of Rule H1.

If a Payee wishes to establish Payor’s PAD Agreements through an electronic process, such as over the Internet or by telephone, the electronic forms and/or details of the proposed process, including the process to verify the Payor’s identity, must also be provided to the Payee’s financial institution for review and approval before they are implemented.

What are the other new requirements for billers, apart from the Payor’s PAD Agreement?
* New requirements have been added that apply when a Payee’s name changes or a Payee wishes to transfer or assign a PAD to another party;

* Payees must act on Notices of Change that they receive from their Financial Institution (FI). FIs send these notices to billers (Payees) to inform them about changes to a Payor’s bank account number or transit number

* PADs initiated by corporate Payees must be in electronic format; and

* Any re-presentment of an NSF PAD must be for the same amount as the initial PAD.

Are there any changes to the terms of Payor’s recourse under Rule H1?
Failure to provide written Confirmation of an electronic PAD, as described above, or not meeting the defined period for sending the Confirmation prior to the first PAD, has been added as a reason that a Payor could dispute a PAD. Otherwise, the reasons that a Payor could make a Reimbursement Claim and the timelines for doing so remain the same.

Do the mandatory provisions of Rule H1 apply to Payees outside of Canada that are initiating PADs drawn on bank accounts in Canada?
Yes, PADs that are drawn on bank accounts held at CPA member financial institutions in Canada are subject to the requirements of Rule H1, regardless of where they originate. In particular, this means that Payees outside of Canada who have Canadian customers must ensure their Payor’s PAD Agreements comply with the new mandatory requirements by February 28, 2010.

In addition, if foreign Payees intend to obtain Payor’s authorization for PADs through an electronic process, they must ensure that this process is consistent with the requirements of Rule H1, and they must send a written confirmation to each Payor in advance in accordance with the requirements set out in Section 16 of Rule H1. A model form setting out the mandatory requirements of the written Confirmation is provided in Appendix IV of Rule H1.

What process should a foreign Payee follow to ensure that its Payor’s PAD Agreement and/or electronic PAD Agreement and authorization process meet the mandatory requirements?
If Payees outside of Canada have a direct relationship with a Canadian financial institution, they should submit their proposed Payor’s PAD Agreement (paper and electronic) to their Canadian FI. If they do not have a direct relationship with a Canadian FI, they should ask their FI in their own country to send the information to its Canadian correspondent bank for review.

How can Payees obtain further information?
Payees may obtain further information about the changes by visiting the CPA’s web site (www.cdnpay.ca), or by contacting their financial institution.


PAD Processing


What happens if a PAD is processed to my client’s account incorrectly?
Your client should inform you immediately if any withdrawal from their account is not in accordance with the terms of the Payor’s PAD Agreement (e.g. different amount or date), or processed after they have cancelled the agreement.

If the client is not successful in resolving the issue with the biller, or if the PAD was originated by a biller with whom they did not have an agreement, the client may request that their financial institution reverse the transaction and return the funds to the client’s account, subject to the time frames below. (This provision may not apply if the client is transferring funds to another account they hold at a different CPA member financial institution.)

* For personal PADs, the Payor has 90 days from the date of the withdrawal to report the problem to their financial institution and seek reimbursement. Once the client has provided the reason for the claim, the Payee’s account will be debited and the funds will be restored to the client’s account.

* For business-related PADs, if there is no contract between the business and the biller, the business has 90 days from the date of the withdrawal to report a problem to their financial institution and seek reimbursement. Any other discrepancies (e.g. incorrect amount) must be reported to the financial institution within 10 business days.

* If a business uses PADs for cash management purposes (e.g. to withdraw funds from the account of an affiliate or subsidiary), the financial institution will reverse a PAD only if no agreement exists between the two entities and the problem is reported within 90 days of its occurrence.

It is important to note that reimbursement applies only to the payment itself; it does not cancel or affect any financial obligation between the parties for goods or services obtained.

Does the Payee still need to distinguish between Personal and Business PADs in the Payor’s PAD Agreement, if they allow the recourse time limit to extend to 90 days for its business customers??
As the PAD Category is a mandatory element as set out in Appendix II of Rule H1, it must be identified in each PAD Agreement. (See Rule H1, Appendix II.)

Can the type of PAD (Personal or Business) be identified in advance by the Payee? Or, must it be left to the Payor to identify the nature of the underlying contract to which the PAD applies?
The Payee can pre-populate the PAD Category field. In this scenario, the Payor would signify his/her consent to such upon signing a paper PAD agreement. In the case of an electronic Payor’s PAD agreement, the PAD category would be confirmed with the Payor through the script or the electronic forms and would also be identified in the written Confirmation.

Can I mask my client’s bank account number when providing the written confirmation for an electronic agreement, or in other correspondence?
Yes, it is acceptable to partially mask or truncate account numbers. The ideal balance would be to provide enough information to enable the Payor to understand the details of the PAD, while ensuring that enough of the bank account number is masked to mitigate security and privacy concerns.

What can I do if a PAD to my customer’s account is returned NSF? Can I debit the account again? Can I apply NSF charges to the next debit?
If a PAD is returned due to insufficient funds, the biller may re-present the payment item only once, and this must be done within 30 days of the original transaction date. If the biller chooses to re-present the PAD that was returned NSF, the PAD must be for exactly the same amount as the original transaction (i.e. it cannot include service fees charged by the biller).

However, if the Payor's PAD Agreement provides for variable amount PADs, the Payee may add NSF charges to the outstanding balance the next time a PAD is withdrawn from the Payor's account, provided the pre-notification provisions are satisfied. Take for example a Payor's PAD Agreement that provides for variable amount PADs reoccurring on the 15th of every month; if on January 15th a PAD of $100.00 was returned NSF, the Payee would have the right to debit the account on February 15th for $200.00 plus NSF charges (i.e. for the outstanding balance plus NSF fees). On the other hand, if the Payor's PAD Agreement provides for a Fixed Amount PAD reoccurring on a fixed date (the 15th of every month), the Payee's only recourse within the clearing system would be to re-present the PAD (without NSF charges) one time only (i.e. for $100.00 in the example above) within thirty days.

Can the mandatory element of “Amount” on the Payor's PAD Agreement state that the PAD amount may vary from month to month, according to the Amount Due on the most recent Billing Statement? Is the variable amount PAD pre-notification still required in this case?
Yes, the Payor’s PAD Agreement can fulfill the mandatory requirement for “Amount” by stating that the amount will vary from month to month. Pre-notification is required unless the Payor agrees to waive this in the Payor’s PAD Agreement.

How much advance notice is required for a Payee to cancel a PAD Agreement?
The intent of the Rule is that the maximum advance notice that a Payee can require in its Payor’s PAD Agreement is 30 calendar days. This period should be based on operational requirements to process a cancellation and should normally be significantly less than 30 calendar days. In practical terms, a Payee may specify the advance notice period in business days (e.g. five business days), as long as this period would fall within 30 calendar days. (See Rule H1, Section 27).

Can you expand on the requirements where a third-party service provider is responsible for the actual debit processing?
The intent of the Rule is to ensure that the Payor knows who is debiting their account (i.e. that the Payor can recognize the name appearing on their account statement). Thus, if the service provider’s name would be shown on account statements as the originator of the PAD, the Payee would need to disclose this arrangement in the Payor’s PAD Agreement.

The intent is not to require the Payee to disclose all legal agency agreements it may enter into with processors, where there is no effect to the Payor. (See Rule H1, Appendix II, Supplementary Elements for further details).

If the Payor submits a request to change their bank account information, is a new Payor's PAD Agreement required? Can there be a section on the Payor's PAD agreement that is specific for a change in the existing PAD agreement?
The account number on which a PAD is drawn is a mandatory element of the Payor’s PAD Agreement. If the account number changes, the Payee must have the Payor’s authorization for this amendment to the agreement.* This authorization may be achieved either by establishing a new agreement with the Payor, or by obtaining an instruction from the Payor to change the account. As this instruction would be an amendment to the original Payor’s PAD Agreement, the Payee would need to retain it along with the original agreement while the amended Payor’s PAD Agreement remains in effect and for at least one year after drawing the last PAD to which it applies, in accordance with Section 18 (a) of Rule H1.

*Account number changes may also be communicated to the Payee via a Notice of Change (NOC). NOCs are used by a Payor's FI to communicate changes in routing information to a Payee's FI, so that the Payee can update their records accordingly. Payees are required to act upon NOCs; no separate authorization from the Payor is required.

If we have a client with an existing PAD Agreement for a particular good and/or service, and the client signs up for an additional good and/or service, can the charges for this new good and/or service be added to the existing PAD Agreement?
Charges for another service may be added to an existing PAD Agreement, provided that it allows for variable amount PADs. Pre-notification and audit trail requirements must also be met.