Is there really a difference between direct debits and standing orders?
Juggling payments for your phone, utilities, toilet roll subscription and other regular payments can be a handful. Standing orders and Direct Debits make those payments automatic, so the money leaves your account without you needing to think about it. But if they both do the same thing, what makes the two types of recurring payment different?
It’s all to do with who’s in control of them and how they’re authorised. This article will help you understand when you should be using one over the other, and how to go about setting them up.
What are Direct Debits?
A Direct Debit is permission you give a company to collect money from your account. The company sets the date and the amount of money, not you. For example, if you have a phone contract, the phone company tells you how much they’re charging for your plan and when you’ll be billed each month.
They have to give you notice of both before they take the payment, which is why you might get a regular email or text letting you know your bill’s ready and the money will be collected soon. Less exciting than a message saying your takeaway’s en route, but a helpful heads up if you’ve forgotten – not to mention legally required.
The Direct Debit Guarantee also makes this kind of payment particularly safe. It’s a guarantee offered by all banks and building societies that accept instructions to pay Direct Debits, and means you’ll be refunded if you aren’t notified before each payment is taken, if a payment is taken in error, or if a payment’s taken after you cancel a Direct Debit .
Direct Debits are typically used for bills that might change from month to month, like gas and electricity bills, phone contracts and debt repayments.
Sound useful? Here’s how to set up a Direct Debit .
What makes standing orders different?
Standing orders are when you tell your bank to transfer a set amount of money on a set day to a company or person.
Unlike Direct Debits, the amount and date won’t change unless you change them. The payments go out automatically, and you need to cancel them manually if you want them to stop.
You might use a standing order for monthly payments like mortgage or rent, regular contributions to a savings account or ISA, or fixed rate subscription fees for things like the gym.
Here’s how to go about setting up a standing order, to help top your savings up in the background and make sure your rent’s always on time.
Get set up in Monzo
Direct Debits and standing orders (which we call Monzo Scheduled Payments) are both ways to make regular payments. The key differences are who sets them up, who decides the amount, and who sets the date. If you’re in the driving seat, it’s a standing order. If it’s a company taking the reins, it’s a Direct Debit .
You can manage and cancel both types of payment in the Monzo app. If you need help, check out our guide on authorising different payments.
Monzo current account required. UK residents only. Individual product Ts&Cs apply.
Questions? Answers.
Do standing orders go out on weekends?
Yes, standing orders can go out at the weekend.
What time do Direct Debits go out?
Direct Debits usually leave your account early in the morning on the due date.
What time do standing orders go through?
Standing orders also typically go through early in the morning on the scheduled date.