Direct Debit CA

In Canada, Direct Debit is processed through a Pre-Authorized Debit (PAD) scheme. PAD is managed by Payments Canada and operates through the Automated Clearing Settlement System (ACSS).

Your business customers in Canada can fund their Nium wallets using PAD. Before they can make a Direct Debit transaction in Canadian dollars (CAD), they must first authorize a PAD agreement. This includes:

• Providing their account number, transit number, and *institution code.
• Accepting Nium’s terms and conditions.

Eligibility requirements

To use Direct Debit in Canada, your program must be onboarded to the Nium_CA entity.

Additionally, your underlying customers must meet the following criteria:

• They must be corporate customers (no individual customers).
• They must have a presence in Canada. Nium’s Direct Debit service in Canada supports self-funding only. This means the onboarded corporate customer can only top up their own Nium wallet to make outgoing payouts.

Set up requirements

To use Direct Debit in Canada, your customer must be linked to the Nium_CA entity; this is a required.

Once their bank account is linked and PAD is authorized, your customer can fund their Nium wallet by calling the /fund endpoint and setting the funding channel to direct_debit.

Faster settlement option

In some cases, a faster funding option is available - subject to Nium's risk approval. With this option, funds from a Direct Debit can be settled into the wallet on the same day.

To enable this, reach out to your Nium account manager or Nium Support for approval and to get it enabled.

Transaction limits

Direct Debit transactions in Canada are subject to a $99 million CAD limit, which is the maximum allowed for this payment rail.

However, Nium may apply additional limits based on your business and associated customers. By default, Nium recommends a standard limit of $250,000 CAD.

If your projected volumes require higher limits, contact your Nium account manager or Nium Support team to request an increase.

Link and verify bank accounts

To initiate Direct Debit in Canada, your customers must first link and authorize their bank account. Nium supports multiple methods for account verification:

White-Labeled microdeposits

With Nium’s white-label microdeposit method, you can build your own UI to securely link your customer's bank account.

1. The customer enters their bank account details in your UI.

1. Nium sends two small deposits to the customer’s bank account.
2. The customer logs into their online banking and notes the deposit amounts.
3. They enter those amounts in your UI to verify their account.
4. Once verified, Nium sends a webhook notification confirming the account was successfully linked.

Plaid

Nium will soon offer support for Plaid, an open banking solution for instant account linking.

With Plaid:

• The customer selects their bank and logs in using their credentials through the Plaid UI.
• If their bank isn’t available, they can complete verification through Plaid’s microdeposit flow.
  • In this case, they receive a $0.01 CAD deposit with a unique code.
  • The customer then enters this code into the Plaid widget to finish the linking process.

Settlement timelines

For CAD Direct Debits, the standard settlement time is T+4 business days, with a daily cutoff time of 6:30 PM ET.

• T+4 means the funds will be available four business days after the transaction is initiated.
• For example, if the transaction starts on a Monday, the funds will typically arrive by Friday (assuming no holidays).

Once the Direct Debit is initiated, funds will settle into your customer’s wallet within this timeline.

Faster settlement option

A same-day settlement option is available but requires prior risk approval from Nium.

To enable this faster funding method, contact your Nium account manager or Nium Support to review the setup requirements and approval process.

Set up and use

Use the following APIs to link a Canadian bank account, verify it with microdeposits, and fund a wallet using Direct Debit.

HTTP Method	API Name	Description
POST	Add Bank Account	Submit your customer's bank account details (account number, transit code, and institution number). This starts the microdeposit process—small, random amounts are sent to their bank account for verification.
POST	Confirm Bank Account	After the microdeposits are received, your customer enters the deposit amounts through this API. If correct, the account is verified. Save the bankAccountId returned in the response.
POST	Set Up Funding Instrument	Use the bankAccountId to create a funding instrument. You’ll get back a fundingInstrumentId, which you’ll use for future Direct Debit transactions.
GET	Fetch Linked Bank Accounts	(Optional) Retrieve the list of funding instruments linked to your customer. You can also get details for a specific fundingInstrumentId.
POST	Fund Wallet	Start a Direct Debit transaction by selecting the "direct_debit" funding channel and providing the fundingInstrumentId. The funds will be pulled from the linked bank account and deposited into your customer’s wallet. On their bank statement, the payment appears as Nium.

Test Microdeposits

Use the steps below to simulate a full Direct Debit flow in the sandbox environment using microdeposits.

1. Add Bank Account: Submit valid bank account details to start the microdeposit process.

2. Simulate Microdeposits endpoint: Trigger the deposit of two small, random amounts into the bank account. These simulate real microdeposits from Nium.

3. Confirm Bank Account: Enter the microdeposit amounts to verify the account. You’ll receive a bankAccountId in the response.

4. Set Up Funding Instrument: Use the bankAccountId to create a funding instrument. You’ll receive a fundingInstrumentId.

5. Fund Wallet: Use the fundingInstrumentId to initiate a Direct Debit transaction. Capture the systemReferenceNumber from the response.

6. Simulate Inward Payment endpoint: Use the systemReferenceNumber to simulate the incoming Direct Debit and complete reconciliation.

PAD Authorization Email

As part of the account linking process, your customer will receive a Pre-Authorized Debit (PAD) email.

This is a regulatory requirement in Canada. The email serves as formal authorization for Nium to debit funds from the linked bank account.

Below is a sample of the PAD authorization email your customer will receive:

Chargebacks

Corporate customers have up to 9 business days to dispute a Direct Debit transaction.

If a chargeback request is submitted within this window, Nium will honor the request and return the funds to the customer.