Pre-authorized debits (PADs) allow third parties that you share your account details with to automatically pull funds from your account. This is most commonly used for payroll providers so that they can collect funds from your account to distribute payment to your employees. PADs are also CRA's preferred method of collecting payment.

Some payment processors like Square also require pre-authorized debits to be enabled on the account they send payouts to incase they need funds to cover a refund.