Standing order (banking)
Encyclopedia
A Standing Order is an instruction a bank account
holder gives to their bank to pay a set amount at regular intervals to another account. The instruction is sometimes known as a banker's order.
They are typically used to pay rent, mortgage or other fixed regular payments. Because the amounts paid are fixed, a standing order is not usually suitable for paying variable bills such as credit card, or gas and electricity bills.
Standing orders are available in the banking systems of several countries, including Germany
, the United Kingdom
, Barbados
, the Republic of Ireland
, Netherlands
, Russia
and presumably many others. In the United States
, and other countries where cheques are more popular than bank transfers, a similar service is available, in which the bank automatically mails a cheque to the specified payee.
. In 2008 a number of banks began to introduce Faster Payments as the method of transfer for standing orders when available, in place of the slower BACS
system; with this method payments reach the receiving account the same day, rather than after a delay of three days or more.
s; both are methods of setting up repeated transfers of money from one account to another, but they operate in different ways. The fundamental difference is that standing orders send payments arranged by the payer, while direct debits are specified and collected by the payee.
Bank account
A Bank account is a financial account recording the financial transactions between the customer and the bank and the resulting financial position of the customer with the bank .-Account types:...
holder gives to their bank to pay a set amount at regular intervals to another account. The instruction is sometimes known as a banker's order.
They are typically used to pay rent, mortgage or other fixed regular payments. Because the amounts paid are fixed, a standing order is not usually suitable for paying variable bills such as credit card, or gas and electricity bills.
Standing orders are available in the banking systems of several countries, including Germany
Germany
Germany , officially the Federal Republic of Germany , is a federal parliamentary republic in Europe. The country consists of 16 states while the capital and largest city is Berlin. Germany covers an area of 357,021 km2 and has a largely temperate seasonal climate...
, the United Kingdom
United Kingdom
The United Kingdom of Great Britain and Northern IrelandIn the United Kingdom and Dependencies, other languages have been officially recognised as legitimate autochthonous languages under the European Charter for Regional or Minority Languages...
, Barbados
Barbados
Barbados is an island country in the Lesser Antilles. It is in length and as much as in width, amounting to . It is situated in the western area of the North Atlantic and 100 kilometres east of the Windward Islands and the Caribbean Sea; therein, it is about east of the islands of Saint...
, the Republic of Ireland
Republic of Ireland
Ireland , described as the Republic of Ireland , is a sovereign state in Europe occupying approximately five-sixths of the island of the same name. Its capital is Dublin. Ireland, which had a population of 4.58 million in 2011, is a constitutional republic governed as a parliamentary democracy,...
, Netherlands
Netherlands
The Netherlands is a constituent country of the Kingdom of the Netherlands, located mainly in North-West Europe and with several islands in the Caribbean. Mainland Netherlands borders the North Sea to the north and west, Belgium to the south, and Germany to the east, and shares maritime borders...
, Russia
Russia
Russia or , officially known as both Russia and the Russian Federation , is a country in northern Eurasia. It is a federal semi-presidential republic, comprising 83 federal subjects...
and presumably many others. In the United States
United States
The United States of America is a federal constitutional republic comprising fifty states and a federal district...
, and other countries where cheques are more popular than bank transfers, a similar service is available, in which the bank automatically mails a cheque to the specified payee.
Germany
A standing order (Dauerauftrag) can run for a set number of payments, a set period of time, or until cancelled.The Netherlands
Standing orders (doorlopende machtigingen) are not available for a set period of time. They run until cancelled.South Korea
A standing order (납부자자동이체) runs until cancelled. They can be cancelled at the account holder's request. The bank charges fees (average 300KRW) per transfer.Spain
A standing order can be set up to run for a set period of time, not indefinitely. They can be cancelled at the account holder's request.UK and Ireland
A standing order can be set up to run for a set period of time, or indefinitely, and can be cancelled at the account holder's request. Standing orders are standardized by the trade body APACSAPACS
The UK Payments Administration Ltd is a United Kingdom trade organisation that brings together all payment systems organisations and gives banks, building societies and card issuers a forum where they can work together on non-competitive issues...
. In 2008 a number of banks began to introduce Faster Payments as the method of transfer for standing orders when available, in place of the slower BACS
BACS
Bacs Payment Schemes Limited is a United Kingdom scheme for the electronic processing of financial transactions. BACS direct debits and BACS direct credits are made using the BACS system...
system; with this method payments reach the receiving account the same day, rather than after a delay of three days or more.
Difference from Direct Debit
Standing orders are distinct from direct debitDirect debit
A direct debit or direct withdrawal is an instruction that a bank account holder gives to his or her bank to collect an amount directly from another account. It is similar to a direct deposit but initiated by the beneficiary...
s; both are methods of setting up repeated transfers of money from one account to another, but they operate in different ways. The fundamental difference is that standing orders send payments arranged by the payer, while direct debits are specified and collected by the payee.
- A standing order can only be set up and modified by the payer, and is for amounts specified by the payer to be paid at specified times (usually a fixed amount at a specified interval). The amount can be paid into any bank account, which need not belong to an organisation vetted by the payer's bank.
- A direct debit requires the payer to instruct the bank to honour direct debit requests from a specified payee; the payee can then take a direct debit for any amount at any time. The payer has no direct control over these payments, but can cancel the direct debit at any time, with no reason required, and require the return of disputed payments. It is not possible to authorise an individual to take direct debits; only organisations that have a contract with the payer's bank, or have been vetted by it, can do this. For details and country differences, see direct debitDirect debitA direct debit or direct withdrawal is an instruction that a bank account holder gives to his or her bank to collect an amount directly from another account. It is similar to a direct deposit but initiated by the beneficiary...
.