Standing Order

A standing order is a service provided by banks in which recurring transactions are automatically performed by the bank on the account holder’s behalf. By placing a standing order, a bank account holder instructs their bank to transfer a predetermined amount of money to a specific bank account at predetermined recurring intervals. You can cancel a standing order at any time.

All Swiss banks offer standing orders as a service. Standing orders can placed at the teller of your bank or via online banking. Many Swiss banks let you place standing orders via their mobile banking apps. Important: Some Swiss banks now charge a fee when you place or cancel a standing order at the bank teller. Make sure to inquire about possible fees in advance.

Standing orders provide a practical solution for paying identical, recurring bills because you do not have to order or approve each bill every billing period. Once you set up the standing order, transactions are performed automatically at the specified intervals until you cancel the order. This relieves you of having to keep track of bill payments, and also prevents bill from accidentally going unpaid.

Unlike a direct debit, in which you authorize a third party to debit money directly from your bank account, a standing order is between you and your bank only. You do not give a third party access to your bank account. However, standing orders have a disadvantage over direct debits in that they can only be used to pay fixed recurring bills in which the amount transferred every billing period is identical (such as rent or insurance premiums). Direct debits, on the other hand, can be used to pay variable bills in which the amount charged varies between billing periods (credit card bills or phone bills, for example).

Because standing orders can also be used to make recurring transfers to other bank accounts held by you, they provide a good solution for setting up savings plans. For example, you can use standing orders to automatically transfer predetermined amounts of money to your savings accounts, pillar 3a retirement accounts, investment fund accounts, wealth management service, child gift accounts, stock broker or retirement funds every month or year.

More on this topic:
Swiss private account comparison
Direct debit FAQ
eBill FAQ
 

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Benjamin Manz is CEO of moneyland.ch and an independent expert on banking and finance.