zaro

What is a Standing Order?

Published in Recurring Payment 3 mins read

A standing order is a regular payment of the same amount that is automatically paid from your bank account on a specified date. It is an instruction you give to your bank to make recurring, fixed-amount payments to another account.

Understanding Standing Orders

Standing orders are a common banking mechanism designed for recurring payments where the amount and frequency remain constant. Once you set up a standing order, your bank takes responsibility for deducting the specified amount from your account and transferring it to the designated recipient's account on the chosen date. This eliminates the need to manually initiate payments each time, providing convenience and ensuring timely transfers.

Key Characteristics of a Standing Order

Standing orders are defined by several core attributes that distinguish them as a payment type:

  • Regular Payment: They are designed for recurring payments, such as monthly, weekly, or quarterly.
  • Fixed Amount: The sum of money transferred remains constant for each payment. Any change requires amending the standing order instruction.
  • Specified Date: The payment is executed on a precise, predetermined date or dates.
  • Bank-Initiated: Based on your instruction, your bank automatically initiates and processes the payment without further action from you.
  • Recipient Account: Money is transferred from your account to another specific account, which can be an account belonging to someone else or even another one of your own accounts.

Common Uses of Standing Orders

Standing orders are highly versatile for various regular financial commitments that involve consistent payments. Some typical applications include:

  • Transferring money between your own accounts: This is directly supported by the reference, allowing you to move funds regularly, for example, from a current account to a savings account.
  • Rent payments: If your rent is a fixed amount each month.
  • Loan repayments: For loans with a consistent monthly repayment schedule.
  • Savings contributions: Regular transfers to a dedicated savings or investment account.
  • Subscriptions or memberships: For services that charge a fixed, recurring fee.

How Standing Orders Work

Setting up a standing order involves providing your bank with specific details: the amount to be paid, the recipient's account details (account number and sort code), the frequency of payments (e.g., monthly, weekly), and the start date. You might also specify an end date, or it can be set to continue indefinitely until you cancel it. Once activated, the bank will automatically process the payments on the agreed schedule.

Standing Order Overview

Characteristic Description
Payment Type Regular, fixed amount
Initiator Account holder (via bank instruction)
Control Full control by the account holder to set up, amend, or cancel.
Flexibility Fixed; requires explicit amendment for any changes to amount or date.
Automation Fully automated by the bank after initial setup.

Managing Your Standing Orders

Managing standing orders is straightforward, and you retain full control over them.

  1. Setting Up: You can typically set up a standing order through your online banking portal, mobile banking app, by visiting a bank branch, or by contacting customer service. You will need the recipient's bank details and the payment specifics.
  2. Amending: If the payment amount, frequency, or recipient details change, you must amend the existing standing order. This can usually be done via the same methods used for setup.
  3. Cancelling: You can cancel a standing order at any time, typically through online banking, mobile app, or by contacting your bank. It's crucial to cancel if a recurring payment is no longer needed to prevent unintended deductions.