Pre-authorized debit (PAD) is the most reliable way to collect monthly mortgage payments in Canada. Most banks let you submit PADs in bulk by uploading a CPA-005 file through business online banking.
What’s in a CPA-005 file
CPA-005 is Payments Canada’s standard for Automated Funds Transfer (AFT) files. A file contains:
- A header record identifying your organization (the originator ID your bank assigns) and a file creation number that must change with every file.
- Debit records — one transaction per borrower payment: amount, due date, the borrower’s institution, transit and account number, and your cross-reference (such as the loan number).
- Credit records if you also pay out (for example, investor distributions by EFT).
- A trailer record with counts and totals so the bank can check the file.
Your bank also needs the account the money settles into, and a short name that appears on borrowers’ statements.
PAD agreements and Rule H1
Before you debit a borrower’s account you need their authorization under Payments Canada Rule H1 — usually a signed PAD agreement kept on file, with pre-notification of amounts and dates and the borrower’s cancellation and recourse rights. Changes to the amount or account generally need a new agreement or notice.
Debit dates and business days
Debits are processed on business days. A payment due on a weekend or statutory holiday is debited on the next business day — and your file must use the date the bank will actually process.
Returns and NSFs
Some debits come back: insufficient funds, account closed, payment stopped. The bank reports returns separately. Each one should:
- Reverse the payment on the loan.
- Charge the NSF fee the mortgage allows.
- Notify the borrower.
- Start your collections follow-up — and decide whether to re-present the debit or rely on a payment arrangement.
How Amortivo handles it
Amortivo builds the CPA-005 debit file from each loan’s payment schedule, adjusts for business days, includes re-presentments of returned items when you choose, and records settlements and returns against each payment — a return opens a collections case automatically. Distributions to investors use a CPA-005 EFT credit file. See loan servicing.