Transfer Order and Direct Debit – What does it Mean?

The promotion of online banking has made financial exchange between people faster and simpler than ever. What term defines the activity that millions of people do every day around the world? This is of course a transfer order. What exactly does a transfer order and a withdrawal order consist in?

Along with the development of the Internet, we can observe an increasingly faster development of the necessary services which forced us to leave the house and dedicate a lot of time. With the success of smartphones, which has served the current phenomenon of the Internet, everyday activities become prosaic, instant and banal. With regard to the development of the Internet, it is thanks to this fast and intense process that we owe the fact that banking operations are so simple today. To make a transfer, we do not even have to turn on the computer anymore – we can order it on the street, in a streetcar, shop or on the move with a few touches on the screen of our smartphone. Most of us carry out transfers almost automatically. What is this action at all and how does something that we officially call the term transfer order mean?

Transfer order – definition

Transfer order - definition

Under this rather simple concept there is also a light definition. A transfer order is nothing but a cash settlement in a non-cash form. By using a simple form on the website of our bank or using the mobile application, we issue instructions for the amount specified by us. It is charged from our bank account and transferred to the payee’s account given by us. If the value of our funds on the account is at least as high as the amount of the ordered transfer – the bank proceeds to its implementation practically immediately.

There is only one condition – the payer and the payee must have an account with the same bank. Otherwise, the transfer is executed the next business day at the times the bank is conducting incoming sessions.

What data is needed to transfer the transfer order?

All data that is needed by the bank to index our transfer is provided as on a tray in the form, with the help of which we will order a transfer. Of the several headings, in total during the transfer we must provide our personal data (person ordering the transfer), the recipient’s bank account number, name, date and amount of funds transferred, as well as its currency. There will also be a date and number of our bank account, which are usually generated automatically.

Lovers of traditional banking can still send a classic, paper form that can be picked up and drawn up at a nearby post office. The classic, rectangular pink print, apart from the above-mentioned data, whose scope of necessity is the same, additionally requires – a signature consisting of the printing and stamps of the institution, where it is transferred.

It is worth noting that interbank transfers can be implemented not only between Polish citizens, but also Polish citizens and foreigners. The transfer by entering the account is converted according to the current rate, sometimes with a commission.

What types of transfer orders are available in Poland?

What types of transfer orders are available in Poland?

In Poland, we can identify 5 ways for a transfer order:

  • ELIXIR – the standard and most popular type of transfer, the execution of which takes place in the interbank net settlement system in the Polish currency. The correct operation of the system, the principle of its servicing by banks, and even the daily schedule of servicing the ELIXIR system by the branches is regulated by the National Clearing House (KIR).
  • RTGS SORBNET – a type of transfer implemented in the SORBNET2 system, used to handle high amounts in real time. The RTGS SORBNET service is handled by the National Bank of Poland (NBP).
  • SEPA Credit Transfer – a system for the execution of transfers whose operating currency is the euro. It covers all 28 European Union Member States as well as a group of selected non-alliance states: Iceland, Liechtenstein, Norway and Switzerland.
  • SWIFT – a type of transfer referred to as a withdrawal order (more on this below), which consists in sending money in foreign currencies (euro, pound, Norwegian krona, etc.) remaining in circulation between more than 200 countries from around the world. It is worth noting that not every payment order fulfills all the features required by the transfer definition.
  • Immediate transfer – a type of instant transfer, which is carried out 7 days a week, 24 hours a day. Funds are usually transferred within a few seconds to a minute from the sender’s account to the recipient’s account if he has an account with the same bank. The most popular system that is used to handle instant transfers is Express Elixir.

Withdrawal request – what is it?

A withdrawal order is a popular type of transfer, which is commonly performed both in domestic settlements and, for example, when making transactions in foreign stores. It consists in the unconditional performance of the order to pay the amount specified by the sender, which can be sent to both a natural person and a legal person or an organizational unit. It takes place between a Polish bank and another domestic bank or foreign bank. In Poland, settlements are made using Nostro or Loro accounts. The condition is one – the currency must be different than zloty. In the past, the payment order was carried out by telegraph or post, currently taking place almost entirely in the sphere of online transactions.

The funds that are sent to the recipient by means of a withdrawal order may be at his disposal in the following form:

  • payment in cash
  • crediting the account, i.e., striking money into a bank account in electronic form by means of an online transfer
  • delivery of a check in order to continue with the payment of money

Transaction costs are divided into three categories:

  1. OUR – all costs are covered by the transferor
  2. SHA – costs due to the bank outlet from which the transfer is executed, are covered by the payer and the remaining costs are covered by the recipient of the money transfer
  3. BEN – all costs are covered by the recipient of the transfer

In short, the general specifics of a withdrawal request are as follows:

  • Foreign currency of a person with a bank account abroad
  • Foreign currency of a person holding a bank account in the country
  • Unconditionality, meaning making a transfer in advance is irrelevant whether the contractor has complied with the findings
  • You can not undo it
  • It is best to use with small amounts of money
  • Avoid when payment terms are spread over time
  • The transfer order is not supervised by any Clearing House as in the case of eg domestic ELIXIR transfers
  • The costs of transfer order are higher than the domestic transfer, but incomparably lower than, for example, other inter-state forms of payment, like letter of credit

Direct debit – what is it?

Direct debit - what is it?

Direct debit is nothing more than a non-cash form of cash settlements. Its implementation is regulated by the Act on Payment Services, the Banking Law and an interbank agreement on the use of direct debits of June 1, 1998.

The described form of payment also takes place only in the area of ​​electronic payment on the Internet and hence – requires that both parties have accounts in the bank and the associated existence of bank account numbers. Unlike a transfer order, the originating party is the recipient. On the other hand, in contrast to a withdrawal order, the Polish zloty is the currency used for operations.

It is also worth adding that:

  • The transaction involves consent between both parties, where the sender must agree to debit his bank account in this way
  • The payer may cancel the executed direct debit transaction in 5 working days or 56 calendar days in case the recipient is a natural person who is not conducting a business activity
  • Transmitting transfers may temporarily block and similarly easily enable the execution of direct debits to any recipient

Summarizing. This transfer, contrary to appearances, is an extremely broad concept, containing not only terms with many meanings, but also completely different types of transactions. Perhaps, we do not realize how many names exist for banking activities that we do every day.

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