What is a Standing Order?

Dagobert

I know this question sounds provocatively inane.

But seriously: is a standing order just a repeat BACS transfer? Does the receiving bank know whether the amount received was sent via a one-off BACS transfer or via SO?

I have a few regular savings accounts and most of them require SO to be set up. I was wanting to switch some of my SOs to a new c/a "by hand" rather than using the switching service. It's easy enough to delete/set up SOs with an online account. But would I need to notify the receiving banks of the change?

MarkyMarkD

Your final paragraph suggests replacing one standing order (from one bank) to another standing order (from another bank) - that isn't any difference as far as the recipient is concerned.

I also doubt that any bank which receives money into a regular savings account cares whether it's a one-off BACS transfer or a standing order. As far as matters to the recipient, a standing order is just a set of recurring BACS transfers.

black-saturn

It's like a direct debit except that the amount is standing. With a direct debit they take what money they need from the bank and if the amount goes up or down they can regulate that. With a standing order if it needs to go up or down or indeed stop you need to write to the bank and let them know. Otherwise it just carries on.

Dagobert

black-saturn wrote:

It's like a direct debit

It's not like a Direct Debit at all: with a DD, the receiving bank initiates the transfer while a SO is completely under the control of the sender.

black-saturn

Dagobert wrote:

It's not like a Direct Debit at all: with a DD, the receiving bank initiates the transfer while a SO is completely under the control of the sender.

Didn't I say that in the rest of the post?

Caped_Avenger

black-saturn wrote:

It's like a direct debit except that the amount is standing.

That's a popular misconception. A Direct Debit is a mechanism for a company to take money from an account. They company request the money from your account, your bank make the decision whether to pay it or not, and then the funds are released from your account. A Standing Order is something you can put in place to send money from your account. That's one of the key differences (if not the key difference). A DD can be for a regular amount, not necessarily different amounts every time (for example, a lot of power companies claim the same amount on a DD every month. BT do this also).

As an aside, another widely-held misconception is that a DD is used for companies to send money back to your account. This is also wrong. If a company sends money directly back to your account, this will be actioned via BACS, and cannotbe actioned using a DD mandate.

To answer the question of the first post: Yes, a Standing Order is just a repeated BACS transfer (in the case of transfers between different banks *), and the recipient would have no way of knowing whether a credit into an account was part of an SO or a BACS.

* I make this distinction because an SO set up, say, from my fd current account to my fd savings account or my friend's HSBC account doesn't use BACS, as it's 'internal'.

Dagobert

Caped_Avenger wrote:

a Standing Order is just a repeated BACS transfer ... and the recipient would have no way of knowing whether a credit into an account was part of an SO or a BACS.

This was my assumption, too. The reason why I am asking is that virtually all regular savings accounts specify SO as [often the only] payment mechanism. I am just worried about losing the bonus.

MarkyMarkD

Caped_Avenger wrote:

As an aside, another widely-held misconception is that a DD is used for companies to send money back to your account. This is also wrong. If a company sends money directly back to your account, this will be actioned via BACS, and cannot be actioned using a DD mandate.

Well, not quite. There is such a think as a "direct credit" which is the exact reverse of a DD - usually used for salary payments. The difference between that and BACS is that it is (usually?) same-day value for payer and recipient. You are quite right, though, that MOST (not all) refunds on DDs are sent via BACS, not via DC.

Caped_Avenger

MarkyMarkD wrote:

Well, not quite. There is such a think as a "direct credit" which is the exact reverse of a DD - usually used for salary payments. The difference between that and BACS is that it is (usually?) same-day value for payer and recipient. You are quite right, though, that MOST (not all) refunds on DDs are sent via BACS, not via DC.

I'm a little confused by this. BACS (link) are the company that operate both 'direct debit' and 'direct credit'. A 'direct credit' transfer is the type of transfer that is widely known as a "BACS transfer", which is the standard, 3-working-day method of moving money between UK accounts.

The same working day transfer that you mention is a CHAPS transfer, run by APACS. This type of transfer credits the beneficiary account on the same working day it debits the sender.

Does anyone else have any insight into this? Are either (or both) of us talking nonsense? Please tell if we are.