A2 Methods of payment - direct debit and standing order

Question 1

what is direct debit ?

Answer 1

direct debit is a payment method that allows 1 organisation to withdraw funds from another’s bank account.

Question 2

what is standing order ?

Answer 2

a standing order is a regular payment of the same amount that’s paid on a specified date.

Question 3

what are features of a direct debit ?

Answer 3

• it is a secure and cashless payment method.
• automated payment collection.
• cost - effective.
• easy for automation.
• used for recurring payments.

Question 4

what are the features of a standing order ?

Answer 4

• automate regular payments .
• reduces the effort and time spent on manual payments.
• reliable.
• has control.

Question 5

what are the similarities of direct debit and standing order ?

Answer 5

The payment flows from the customers bank or building society account to the company without the need to authorise an individual transfer , send a cheque and pay in cash.

Question 6

what are the differences of direct debit and standing order ? ( 6 marks )

Answer 6

• customers control standing orders and businesses control direct debits.
• standing orders are fixed amounts , direct debits are variable amounts.
• standing orders are a payment instruction, set up by an individual to your bank and Direct debit give permission to a third party to automatically take money from an account.
• standing orders are fixed payments on regular intervals , direct debits are for the collection of payments.