In this article, we’re going to share the difference between a standing order and a direct debit.
We’ll also answer a few frequently asked questions and discuss when it’s better to use one over the other.
Of course, if you’re looking to open bank accounts, you can use our other free resources to start immediately. These resources include everything from opening international accounts 100% remotely to more specific articles like opening non-resident bank accounts in Portugal.
Feel free to jump ahead to the areas most relevant to you by using the table of contents below.
Table of Contents
- What Is the Difference Between a Standing Order and a Direct Debit?
- When Would You Use a Standing Order?
- Frequently Asked Questions
- Do You Want Help Opening Bank Accounts?
What Is the Difference Between a Standing Order and a Direct Debit?
There are three main differences between a standing order and a direct debit payment, these differences include:
- Parties involved in arranging the transaction
- Value of the transaction
- Timing of the transaction
In terms of the parties involved, a standing order is set up directly with the bank to facilitate a transfer from the account holder to a third party. On the other hand, a direct debit is a payment relationship that is set up with a third party and does not require the bank’s involvement (besides releasing the funds per your agreed-upon terms).
As for the transaction value, standing orders are used when the amount is fixed, whereas direct debits can vary each month depending on the terms (e.g. consumption or usage) of the arrangement.
It’s important to also be aware of Direct Debit indemnity claims when performing a direct debit collection.
Standing Orders
Standing orders refer to scheduled instructions to send payments on a fixed frequency for a fixed amount. In most cases, standing orders can be created, managed, and canceled directly from online banking.
Direct Debit
Direct debit refers to a scheduled arrangement between two parties, where the receiving party withdraws funds directly from the sending party’s bank account. Examples of direct debits include subscription payments for online services and streaming platforms.
If you’re looking to facilitate a transfer because you’re moving to Portugal from the UK, US, or elsewhere and need a to open a local bank account you can access our free article linked here for more information on how to get started.
Do You Want Our Free Non-Resident Banking Guide?
Sign up here to receive our Free Non-Resident Banking Starter Guide and weekly updates on the best account opening options available:
When Would You Use a Standing Order?
Standing orders would be used when you have fixed regular payments that do not fluctuate in terms of price or payment date. With this in mind, these payments typically involve utilities like gas, electricity, television, internet, and phone. Other examples include rent or mortgage payments.
Frequently Asked Questions
Below are three of the most common questions that we receive from people looking for the difference between a standing order and direct debit. If you have further questions you would like answered, don’t hesitate to get in touch with us directly.
Which Is Better Standing Order or Direct Debt?
To decide whether it is better to use a standing order or direct debit, you need to consider the timing and the value of the payment being made. For example, standing orders are better when a payment is made on a fixed schedule for a fixed amount. However, if the timing and/or value of the payment can fluctuate, then a direct debit is the better choice.
What Are the Disadvantages of Standing Order?
The disadvantages of a standing order involve a lack of flexibility, the requirement to cancel and reschedule when changes occur, and the fees involved. That said, they do offer value for fixed payments that rarely change.
Can I Change My Direct Debit to a Standing Order?
Unlike a standing order, direct debit payments are set up with a third party, not your bank. So, in order to turn a direct debit into a standing order, you will need to cancel the direct debit with the third party and then set up a standing order with your bank.
Do You Want Help Opening Bank Accounts?
If so, you can access GlobalBanks Insider and start the process of applying for an offshore account in a few clicks.
GlobalBanks Insider is a dedicated account opening solution that involves direct support from our team and direct introductions to the banks of your choosing. It gives you instant access to the…
+ Direct support from a team of banking experts
+ Direct introductions to your desired banks
+ Answers to your most pressing questions and challenges
+ Expert insights on which banks to choose & why
+ Plus FULL access to our entire suite of account opening tools and intelligence!
And “yes!” GlobalBanks Insider is designed to help foreign and non-resident individuals and companies open bank accounts.
You can learn more on the products page from the main menu above.
