What is the Difference Between Direct Debit and Standing Order?
🆚 Go to Comparative Table 🆚Direct Debit and Standing Order are both automatic payment methods, but they have some key differences in terms of control, setup, and management. Here's a comparison of the two payment methods:
Direct Debit:
- Set up by the organization to which you're making the payment.
- You sign a mandate giving the company permission to take funds from your account in an agreed manner.
- Payments can vary in frequency and amount.
- Controlled by the organization collecting the payment.
- Customers do not have the ability to change or cancel the payment without notifying the organization.
- Organizations are notified automatically by the Direct Debit system of any cancellations or failures.
Standing Order:
- Set up by customers, who can amend or cancel the standing order as and when they like.
- An instruction given by the customer to their bank to pay a fixed amount at regular intervals (e.g., weekly, monthly, quarterly, or yearly).
- Controlled by the customer, who chooses the amount and frequency of the payments.
- Customers can change or cancel the standing order without notifying the organization.
In summary, Direct Debit is more suitable for organizations that need to collect varying amounts and require tighter control over the payment process, while Standing Orders are better suited for consumers who want to make regular, fixed payments to other individuals or organizations.
Comparative Table: Direct Debit vs Standing Order
Direct Debit and Standing Order are both automatic payment methods, but they have some key differences:
| Feature | Direct Debit | Standing Order |
|---|---|---|
| Setup | Set up by an organization, such as a business or institution. The organization controls the frequency and amount of payments. | Set up by the customer, who controls the frequency and amount of payments. |
| Control | Payments are managed by the organization, which can vary the amount and frequency without further authorization from the customer. | Payments are managed by the customer, who chooses the amount and frequency and can change or cancel them without notifying the organization. |
| Frequency and Amount | Payments can vary in frequency and amount, depending on the organization's preference. | Payments have a fixed amount and frequency, as chosen by the customer. |
| Failed or Late Payment Notification | Organizations are notified of any failed or late payments. | Customers may need to check their bank accounts for failed payments, as no notification system exists. |
In summary, Direct Debit is controlled by the organization and allows for variable payments, while Standing Order is controlled by the customer and has fixed payments.
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