Direct Debit:
- A direct debit is an automatic payment system in which a payee is authorized by the payer to withdraw money from payer's account.
- It means a payee has a legal right to draw the amount when the amount due from the payer's account at a certain period.
- In an advance, a bank account holder gives an instruction to a bank about timing and amount of withdrawals to the particular payee.
- A payee can withdraw any amount at any point of time but the control remains with the payer only.
- If anything changed between payer and payee, a payer can inform bank and has right to stop or cancel the payment.
- In direct debit, the monetary amount varies from time to time.
Standing order
- A standing order is also known as standing instruction or a bank's order.
- In standing order, a payer can instruct a bank to transfer specific amount from his account at regular intervals.
- In standing order, an instruction is already given to the bank by the payer to transfer a certain amount to the payee's account at a regular interval.
- A standing order facility is suitable to those payments which fall due on fixed time with a fixed amount. It means a monetary amount remains the same.
Direct Debit v/s Standing Order
Basis
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Direct debit
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Standing order
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Meaning
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Direct debit is a service of payment in which a bank account holder can authorize the customer to withdraw the due amount directly from his account.
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Standing order is an instruction given by the bank account holder to a bank to pay a fixed amount at an intervals to another person’s account.
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Transaction amount
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In direct debit, a transfer amount varies from time to time
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In standing amount, a transfer amount remains same all the time.
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By nature
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A direct debit is a complex by nature.
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Standing order is simple by nature.
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Control on payment
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A payee has a total control on the payment.
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Opposite to the direct debit, in standing order a payer has control on it.
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Charges
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Bank charges a low amount of fees for this service.
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Bank charges a more fees as compared to the direct debit.
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Speed of service
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Direct debit is fast service.
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Standing order is slow service as compared to the direct debit.
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Notification
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In case if the transaction failure by the payee, the bank will send notification.
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There is no notification at all in any case.
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Example
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Mobile Bills, Electricity bill, Gas bill
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Rent, Insurance premium, Subscriptions, Equated Monthly Instalments
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