What is a standing order?

How do standing orders work?

A standing order is a convenient way to make regular payments from your bank account to a business, individual or another account. For example, you might want to set one up to: 

• Pay your rent

• Put money into your ISA 

• Pay a car-pool buddy with whom you share petrol costs 

• Support your child at university 

• Send a cash gift to a family member on their birthday

• Pay a company providing a regular weekly service

How do I set up a standing order?

Anyone who has a current account can set up a standing order. Unlike a Direct Debit, no one can set up this type of payment on your behalf. If you want to be able to send regular, fixed payments, all you need to do is give your bank the following information:

• The recipient’s name - this could be the trading name of a business or the first and last name of an individual

• The recipient’s account number and sort code

• Whether it’s a business or personal account

• A payment reference, so you can easily identify the payment later

Your bank will ask you to confirm the request using security details that identify you as the account holder. 

Depending on how you access your account, this could involve:

• A card reader

• Fingerprint recognition

• An email or text verification message

• Answers to security questions, such as your first school or mother’s maiden name

How long does a standing order take to clear?

Standing orders should be processed on the payment date established if both your bank and the recipient’s bank are using the Faster Payments service. If not, the payment is likely to clear at the end of the next working day, although on rare occasions, the process can take between three and five working days. Also, if your payment date falls on a weekend or public holiday, the money will be transferred on the next working day.

Why would a standing order not be paid?

A standing order should always go through, but there are a couple of reasons why it might fail. These are:

• There is a technical glitch at the bank’s end. In this case, the bank would cover any loss of interest incurred by the recipient, after resolving the issue. 

• You don’t have enough money in your account, or the payment will cause you to exceed your overdraft limit. The bank will seek to process the next scheduled standing order, but you would need to contact the recipient about the missing payment.

Note: If you don’t have enough funds to cover a standing order, contact your bank and ask if you can extend your overdraft temporarily. If this happens more than once, consider cancelling the standing order and paying in a different way. If the payment is for a non-essential product or service, think about cancelling it until you are in a better position to pay.

The fact that standing orders can't be automatically updated if costs or dates change makes them unsuitable for variable payments, such as utility bills, or any affected by interest rate changes

How do you cancel a standing order?

There are three main ways to cancel a standing order:

• Identify a cancellation date: Set a cancellation date when you arrange the standing order. This could be the case if you’re paying for an annual magazine subscription. To do this, either fill in the final payment box on your application or tell your bank if you’re setting up the standing order over the phone. If you choose this option pick a date just after the date of the final payment you want to go through

• Don’t pick a date: Leave the final payment date box blank, and cancel at a later date

• Stop payments: You can contact your bank at any time to cancel, just do so a few days before the next payment is due. 

Note: To change a standing order’s amount, just let your bank know the new amount, or alter it yourself via your online bank account or mobile app.

Differences between standing orders and Direct Debits

A standing order is a payment process you set up by contacting your bank. It ensures a fixed sum is paid to a company, person or one of your own accounts, such as a savings account or ISA. 

A Direct Debit is set up by the company you’ll be paying. They will seek authorisation from you for your bank to release to them enough money to cover the monthly purchase or service. 

Unlike a standing order, the company that set up the Direct Debit can change what they take from your account, so the monthly sum is not set in stone. For example, energy companies may alter the exact amount they draw from your account in line with your usage.  

If a Direct Debit fails to go through, the issue is flagged up with the recipient, whereas with a standing order, there may not be any notification.