Why PAD/ACH Payments Have a 3-Day Hold

VoPay applies a three-day hold on PAD and ACH payments to allow banks time to confirm funds have cleared. This safeguard helps prevent reversals, reduce payment risks, and ensure compliance with Payments Canada and NACHA regulations.

When you process a Pre-Authorized Debit (PAD) or EFT Payment through VoPay, funds are held for three (3) business days before being released. This waiting period allows the payer’s bank to confirm whether the debit has cleared successfully or has been returned due to issues such as Non-Sufficient Funds (NSF), invalid account, or unauthorized transactions.

This process follows standard clearing rules established by:

• Payments Canada (for PAD/EFT transactions in Canada)
• NACHA – The Electronic Payments Association (for ACH transactions in the U.S.)

How PAD/ACH Transactions Work

A PAD or ACH debit is the electronic equivalent of a cheque deposit — the difference is that it’s entirely digital.

When a PAD is initiated:

1. The debit request is sent to the payer’s financial institution.
2. The bank either accepts the transaction or returns it with a reason code (e.g., NSF, invalid account, unauthorized).
3. The return message travels back through the network, typically within 48–72 hours for most reasons.

Why VoPay Applies a 3-Day Hold

The 3-day hold period gives banks time to process and respond to the debit file. This safeguard allows VoPay to:

• Confirm that funds have cleared the payer’s bank account.
• Receive any return notifications before releasing funds.
• Prevent disbursement of uncleared or reversible transactions.

It’s similar to how a deposited cheque is shown as “pending” until the funds clear.

Regulatory Context and Timelines

How VoPay Processes Return Notifications

• VoPay automatically receives and reconciles return files from the banking network overnight.
• Returned transactions are immediately flagged and updated in your VoPay dashboard and via API.
• Depending on the payer’s bank, most returns are received within 2–3 business days, though some exceptions (e.g., unauthorized debits) can appear later.

Important Notes

• The 3-day hold covers the majority of NSF and data-entry errors, but some returns can occur beyond this window, especially for unauthorized consumer transactions (up to 60 days in the U.S.).
• VoPay releases funds once the standard return window has elapsed without incident, but banks may still initiate reversals later under regulatory exceptions.
• The timing of status updates can vary slightly based on each financial institution’s settlement schedule.

Summary

The three-day hold period is an industry-standard practice designed to protect all parties by ensuring that funds have fully cleared the payer’s bank. This approach minimizes reversal risk, improves reconciliation accuracy, and maintains compliance with both Payments Canada and NACHA frameworks.

Frequently Asked Questions (FAQ)

Q: Why can’t VoPay confirm immediately if the funds have cleared?
A: The clearing process depends on each bank’s return-file schedule. Most NSF or invalid-account returns arrive within 2–3 business days.

Q: Can returns still occur after three days?
A: Yes, in limited cases (e.g., unauthorized consumer debits in the U.S.)—up to 60 days per NACHA rules.

Q: Do all banks send return files at the same time?
A: No. Some banks submit return files overnight; others batch them throughout the day. VoPay reconciles these automatically as they arrive.

Q: Will this policy change when real-time payments expand?
A: As faster payment rails become more common, VoPay plans to align hold times accordingly while maintaining compliance safeguards.

Last updated: October 2025
Applies to: PAD (Canada) | ACH (U.S.)
Author: VoPay Compliance & Operations Team