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The difference between direct debits and standing orders?

It’s easy to get confused between a direct debit and a standing order. Both are ways in which to make payments from a personal or business bank account but they have a few key differences. 

A direct debit is a payment to a third party and it will be set up by the organisation to which the payment is going. The arrangement will be made directly with the bank with the account holder’s permission. The organisation can then transfer payments out of that bank account on a regular basis, usually in order to pay a bill. Organisations with the authority to do this will have been through a careful vetting process. The amount and frequency of payments that is debited by the business may vary but the account holder needs to be given advance notice if the amount, or the date that the payment is coming out, changes (normally with 10 working days notice). Essentially, the organisation controls the direct debit although it can be cancelled at any time by the account holder contacting their bank.

A standing order is a payment of the same amount and frequency created and controlled by the bank account owner themselves to another organisation, person or another of their own bank accounts. A standing order can be cancelled or updated at any time by the account holder but not by a business receiving the payments. 

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