Many banks and financial institutes offer their customers numerous payment solutions. Apart from loans and deposit acceptance, these amenities include Standing Orders and Direct Debits. Both the solutions work as the payment methods to make it easy for you to pay your monthly bills, rent, or bank mortgages.
Direct Debit is a payment solution that allows the payee to draw a specific amount for a payment from the payer’s account. A Standing Order, on the other hand, authorizes the payer to instruct the bank to transfer a specific amount at a scheduled time to the payee’s account. Direct Debit payments can vary from month to month, but a standing order does require you to keep a fixed amount to pay.
Let’s find out the primary difference between Direct Debit and Standing Order.
Direct Debit works as a system to make the payment, in which your bank can authorize its customers to pull out the due amount directly from the payer’s account. A standing order is an instruction that the bank account holder gives to their bank to pay a specific amount to the beneficiary’s account at periodic intervals.
In Direct Debit, the payee has control over the payments, whereas a standing order gives the payer this privilege. It involves a low administration fee and uses automatic notifications for cancellation or failure to the payee. Direct Debit is a fast process and possesses a complex nature of the financial solution.
Frequency of Payments
The payment amounts in a Direct Debit can vary from month to month. Standing orders work with a fixed amount of payments that you need to make at the time of setting up an account for yourself for this purpose. They do not need any notifications for cancellation or in case of the failure to the payee. A Standing Order is a simple process but involves a comparatively high administration fee.