Standing Orders vs Direct Debits [What You Need to Know]

If youโ€™re trying to understand the difference between standing orders vs direct debits, youโ€™re in the right place.

On the other hand, if youโ€™re looking to open new bank accounts, whether in the United Kingdom, Portugal, or with banks in Serbia, you can use our other free resources to navigate your options.

That said, in this article, weโ€™re going to share which of these two payment methods is best for different client types along with other important considerations.

Feel free to use the table of contents to jump ahead to the sections most relevant to you.

Table of Contents

  1. Standing Orders vs Direct Debits
  2. Frequently Asked Questions
  3. Ready to Explore Your Options?

Standing Orders vs Direct Debits

The difference between standing orders and direct debits is that standing orders are fixed payments on regular intervals while direct debits are for the collection of payments at any point in time. For instance, a standing order can occur weekly, monthly, quarterly, or yearly. On the other hand, direct debit can happen whenever a payment is due.

How Do Standing Orders Work?

Standing orders are regularly scheduled payments of a fixed amount. Instead of recurring the recipient to request payment, standing orders are automatically sent from the bank on the specified date. Common use cases of standing orders include fixed monthly payments like rent, insurance, mortgage payments, and other payments with a fixed amount that does not change over time. So, in terms of standing orders vs direct debits, standing orders are better suited for fixed payments.

How Does a Direct Debit Work?

Direct debit refers to payments that are pulled from your bank account by another company. In most cases, direct debit is used for recurring payments of fluctuating value. Common use cases for direct debit include consumption-based expenses like electricity, water, gas, and other utilities that occur at a fixed interval (e.g. monthly) but at varying rates. So, in terms of standing orders vs direct debits, direct debits are better suited for variable payments.

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Frequently Asked Questions

Below are three of the most common questions that we receive from people looking to choose between standing orders vs direct debits. If you have further questions you would like answered, donโ€™t hesitate to get in touch with us directly.

Is It Better to Pay By Direct Debit or Standing Order?

To determine whether it is better to pay by direct debit or standing order, you need to consider two important questions, the timing of the payment and the value. If the timing of the payment is fixed on a single recurring interval and the amount is exactly the same each time, then a standing order is likely best suited. Alternatively, if the value of the payment changes (or the timing of the payment can fluctuate), then direct debit may be better suited.

Are Standing Orders the Same as Direct Debits?

Standing orders are not the same as direct debits. While direct debits allow for variations in the amount paid, standing orders always pay the exact same amount. Additionally, direct debits are requested by a third-party company. Comparatively, standing orders are initiated by the bank on a fixed schedule.

What Is a Disadvantage of a Standing Order?

The main disadvantage of a standing order is that they do not offer flexibility. For example, if there is a change in the payment amount, the standing order will need to be canceled. The same is true if a change in payment date occurs. In both instances, a new standing order will need to be arranged. So, in terms of standing order vs direct debits, the value and timing of the payment are important considerations.

Ready to Explore Your Options?

If you would like assistance navigating your banking options, including standing orders vs direct debits, we can help.

You can access GlobalBanks IQ, our international banking intelligence platform, in just a few clicks. Unlock our bank database, individual bank profiles, account opening strategies and reports, banker scripts, and more.

But, if you want a 100% personalized account opening service that taps into our teamโ€™s expertise and provides direct banker introductions, you can get started with GlobalBanks Insider.

Of course, if you have any questions, please contact us directly.

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GlobalBanks Team
GlobalBanks Team

The GlobalBanks editorial team comprises a group of subject-matter experts from across the banking world, including former bankers, analysts, investors, and entrepreneurs. All have in-depth knowledge and experience in various aspects of international banking. In particular, they have expertise in banking for foreigners, non-residents, and both foreign and offshore companies.

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