CandleFocus Glossary Editor
Stop payments are a useful way for banks account holders to protect themselves from fraudulent or incorrect payments. The stop payment order is a way for a bank account holder to stop any form of payment from being processed, regardless of whether it’s a check, ACH transfer, or wire transfer.
When a stop payment order is issued, the bank is asked to not update any funds from the payer’s account to the payee’s account, or release any check or payment made to the payee’s account. The bank is also asked to not honor any payment that the payer wants to cancel.
In most cases, a stop payment order must be placed by the payer and must be done before the bank processes the payment. The bank then has to search through all pending payments and other transactions of the payer to make sure that the payment that is being cancelled hasn’t been processed yet. If it has been processed, the stop payment order will not be successful. To make sure that the payment order has been stopped, the payer must obtain a confirmation from the bank.
Usually the fee for a stop payment order is a flat fee depending on the type of payment being cancelled. The precise fee for a stop payment order will depend on the circumstances of the cancelation, the bank involved, and the complexity of the transaction. Generally, the payment stop order request will last between six months to a year, and must be renewed if the payer wishes to keep the outstanding payment from being released or sent out.
If the payer needs to cancel the payment at any time during the time frame of the stop payment order, they must contact their bank to inquire. The payer must also provide proof that the payment is being cancelled and the bank can then proceed to reverse the pending payment.
Overall, stop payments are an effective way for bank account holders to protect themselves against fraudulent or incorrect payments. Stop payments are also useful when cancelling goods or services that have been paid for but are yet to be delivered or rendered. Issuing a stop payment order costs the bank account holder a fee, but this is a small price to pay to ensure that their finances are secure.
When a stop payment order is issued, the bank is asked to not update any funds from the payer’s account to the payee’s account, or release any check or payment made to the payee’s account. The bank is also asked to not honor any payment that the payer wants to cancel.
In most cases, a stop payment order must be placed by the payer and must be done before the bank processes the payment. The bank then has to search through all pending payments and other transactions of the payer to make sure that the payment that is being cancelled hasn’t been processed yet. If it has been processed, the stop payment order will not be successful. To make sure that the payment order has been stopped, the payer must obtain a confirmation from the bank.
Usually the fee for a stop payment order is a flat fee depending on the type of payment being cancelled. The precise fee for a stop payment order will depend on the circumstances of the cancelation, the bank involved, and the complexity of the transaction. Generally, the payment stop order request will last between six months to a year, and must be renewed if the payer wishes to keep the outstanding payment from being released or sent out.
If the payer needs to cancel the payment at any time during the time frame of the stop payment order, they must contact their bank to inquire. The payer must also provide proof that the payment is being cancelled and the bank can then proceed to reverse the pending payment.
Overall, stop payments are an effective way for bank account holders to protect themselves against fraudulent or incorrect payments. Stop payments are also useful when cancelling goods or services that have been paid for but are yet to be delivered or rendered. Issuing a stop payment order costs the bank account holder a fee, but this is a small price to pay to ensure that their finances are secure.