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Standing Order vs Direct Debit - What is the difference?

What's the difference between a direct debit and a standing order? In this blog post, we explain everything you need to know about direct debit vs standing order payments.

When you’re making regular payments, it’s useful to set it up to automatically pay the right amount at the right time. This is when you can benefit from a direct debit or standing order. These are both a kind of automatic payment, but they’re quite different from each other. Here’s how to know the difference...

What is a Direct Debit?

The main difference between a standing order and direct debit is that a direct debit can only be set up by the organisation to which you’re making the payment.

With direct debit, you give permission for a company to take a variable amount from your bank account each month. This is the kind of automatic payment used for your phone or gas bill: the amount you pay is flexible, so payments can vary. The advantage of direct debit in these examples is that it allows you to pay for what you use.

You set up a direct debit by signing a direct debit form or mandate, which confirms who is receiving the payment, which account will be debited, and the date and amount of the payment. The company has to tell you in advance (normally 10 working days) if the amount you pay will change.

Another advantage of direct debit is consumer protection. If you are ever debited in error, the full amount will be refunded to you via the Direct Debit Guarantee scheme. This scheme also allows you to cancel a direct debit at any time.

If you want to know more about the meaning of direct debit payments or how to set them up, you can read our complete explanation of what is a direct debit and how it works.

What is a Standing Order?

Standing orders, on the other hand, are automatic payments that you set up yourself. You are in complete control, determining how much to pay and when, and you can amend it at any time.

How does a standing order work? With a standing order, you give an instruction to your bank to automatically pay a fixed amount at regular intervals, be it weekly, monthly or as an annual payment. You might use it to pay rent, other people, or transfer to your other accounts. Once you’ve set up your standing order, it sticks to your exact instructions, unless you change it yourself.

Another difference between a standing order and direct debit is that there’s no mandate for you to sign. Standing orders don’t involve a company claiming variable payments from you. However, it does offer you less consumer protection. If you need to make changes to or cancel your standing order, it’s your responsibility.

If you want to read more about what standing orders mean or how to set one up, you’ll find info in our complete guide on what is a standing order and how it works.

Which is Better: Direct Debit or Standing Order?

Both are good ways to make regular, automatic payments. The better one is the one that best suits the type of payment you want to make.

Direct debits can be flexible around the dates and the amount of money you are billed. Standing orders are simpler: when and how much you will be billed won’t change unless you change it yourself. Direct debits are set up by the organisation you are paying. They’re in charge of any changes. Standing orders you can set up yourself – and it’s up to you to make changes.

Direct debits give you consumer protection under the Direct Debit Guarantee, but with a standing order, you’re less protected if a payment goes out in error.

More questions?

We hope we’ve cleared up your questions about the difference between standing order and direct debit. If you have questions about similar money topics, check out our blog posts below: