A standing order is an instruction you give to your bank or building society to authorise a payment for a set amount, usually on a regular basis, to be made to another UK bank or building society account. On the day specified, your account will be debited and the money transferred to the person or business receiving the money.
What would I use this for?
- Standing orders are typically used when you want to pay a person or business a set amount on a regular basis. It can be made to any UK bank or building society account. Standing orders are typically used to make rent payments, pay magazine subscriptions, monthly charity donations or if you want to make a regular payment into a savings account. A standing order amount remains the same, unless you amend your instruction. All standing order payments are sent on bank working days, and since January 2012, are mostly processed by Faster Payments – meaning that the payment will often leave your account on the same day that it is credited to the receiving account.
How do I use it?
- You will need the sort code and account number of the person or business you want to pay. You will need to provide these details to your bank or building society.
- You may also be asked to provide a reference so that the recipient will know what the payment relates to.
- To ensure your payment is processed correctly it is extremely important that you provide the correct sort code and account number.
- Any person or company with a current account can set up a standing order either online, over the phone or at a bank branch. They are set up for a set period of time (e.g. every month for a year) or until they are cancelled. There’s no charge for setting up a standing order but be aware that if a standing order payment makes you go overdrawn you may be charged interest.
- When you set up a standing order it is vital that you give the correct sort code and account number of the person/business you want to pay. If you give incorrect details your money may end up in someone else’s account and it may be difficult to get it back.
- Consumer protection providing an immediate refund will apply if you are an innocent victim of fraud – for instance, if a fraudster made a standing order payment from your account. Your claim needs to be made within the 13 months of the fraudulent transaction leaving your account. Payments require your authorisation in advance and your bank must tell you what information the payment will be processed on (e.g. account number and sort code). If you give incorrect information and the payment goes astray your bank must assist you in tracing the funds, and new industry changes further help customers in this situation. However, your bank is not liable for getting the funds back, and they may charge you for doing this. Claims must be made within 13 months. For more information, see: http://www.fasterpayments.org.uk/consumers/what-happens-if-i-have-sent-payment-wrong-place
- If paying a business, it is usually best to opt for a Direct Debit where possible as it offers better consumer protection.
- You should always be careful to check that the sort code and account numbers are correct for the payment you want to send.
- Standing orders are different to Direct Debits as a standing order authorises the customer’s bank to send the money. A Direct Debit authorises the beneficiary to collect the money from your account. Also with a Direct Debit the amount can vary but with a standing order it remains the same, unless you amend your instruction.
- Account holders usually need to be at least 16 or 18 to use standing orders, but some accounts for younger people also offer standing order facilities, so check with your bank or building society.