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Automated payments are commonly used to pay salaries and benefits (such as pensions). You can also use them to pay bills or make other regular payments. Automated payments are made automatically into a named bank account.
A standing order is an instruction that you give to your bank or building society to make regular payments to a specified person or company’s bank account. The money will arrive in their account up to three working days after leaving yours, but some payments may get there within just a few hours if both banks, or building societies, involved take part in the Faster Payments Service (which is become increasingly more common).
The time taken for a standing order payment to be received depends on where the money is going from and to, so if you are paying a bill or credit card statement and you need the money to arrive by a particular date, it is important to check how long it will take.
You can complete a standing order form and give it to your bank, many banks will also allow you to set up a standing order using online or telephone banking.
With a standing order, the amount is fixed and paid at set times, but you can cancel it or amend the amount, date or frequency by contacting your bank.
You can set up a standing order so that it finishes on a certain date or after a certain number of payments have been made.
A direct debit is an instruction that you give to your bank, or building society, authorising an organisation to collect varying amounts from your account, as long as you have been given advance notice (normally ten working days) of the amount, the date of collection and how often they will be paid.
All banks and building societies that operate the Direct Debit Scheme are committed to provide the Direct Debit Guarantee for customers.
Direct debits are useful for paying regular bills (such as gas or electricity), or for any regular payments to an organisation that accepts direct debit payments.
Paying by direct debit saves time, is very convenient, and means that you do not have to worry about remembering to pay a bill. It is common for utility providers (including telephone companies) to offer discounts if you choose to pay your bills by direct debit.
To set up a direct debit you either: complete a direct debit form ; or provide authorisation over the phone. The organisation that you are paying will ensure that your bank knows that you have authorised it.
You can cancel a direct debit at any time by notifying your bank or building society. You should also notify the organisation that it is set up to pay, if you have entered into a contract for services which are still being supplied, so you can arrange alternative means of payment.
Telephone and internet banking
Telephone and internet banking is becoming increasingly common and many people like the convenience it offers, allowing you to transfer money, pay bills and set up payments 24 hours a day.
If your bank offers telephone or internet banking services, you can transfer money directly to another account using the account details of the person or company you are paying. You may need to check your bill to find the details to enter or ask the person for their account number and sort code. You will also need to supply a reference so that the person receiving the money knows what the payment is for.
A number of banks now use the Faster Payments Service for telephone and internet payments, which means that, often, the money is transferred within two hours. Using this service means the money gets to accounts much quicker, so it is even more important to make sure you have enough money in your account. It is also important to ensure that you use the correct sort code and account details.
You can pay for most things over the phone or online by giving the details of your debit or credit card to the business or supplier you are buying from. Some card providers offer security features (for example MasterCard SecureCode or Verified by Visa) which require you to enter, or quote, a password that you have set, which can help you keep your details more secure. If you do opt in for these services you may also be asked to provide this password in addition to your PIN when paying for things in person.
Online e-money accounts
With these types of accounts, you register your personal details and your debit or credit card details with the operator and then you can pay either by:
maintaining a running balance by putting money in the e-money account using a debit or credit card, and then when you buy (or sell) goods online, the money is taken from (or added to) your balance; or
setting up an account linked to your payment card but with no money in it, so that when you buy or sell goods online, the e-money provider charges (or pays) the money to (from) your debit or credit card at the same time. In this case, there is no running balance on your online e-money account.
The most common operators of these accounts are PayPal and Google Checkout, although there are others.
You can use your e-money account when the website that you are buying from is signed up with your e-money account operator.
Direct credit is a simple, secure and reliable service, which enables organisations to make payments by electronic transfer directly into bank or building society accounts.
This system is mainly used for paying wages and salaries, but can also be used for payments such as pensions, employee expenses, insurance settlements, dividends and refunds.
CHAPS is an electronic bank-to-bank, same-day payment made within Great Britain.
CHAPS is generally used for commercial and banking business, such as business-to-business payments, or by solicitors or licensed conveyancers to transfer the purchase price of a house between the bank accounts of those involved.
CHAPS is also sometimes used by individuals buying or selling a high value item, such as a car, who need a secure, same-day guaranteed payment, where the value is more than can be sent through the Faster Payments Service.
There is usually a charge payable for making a payment by CHAPS.
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