What Is a Stop Payment And How Does It Work? (2024)

Canceling a check or payment, also called issuing a stop payment order, isn’t always a simple task, and it requires that you act swiftly once you discover an issue.

Here’s an in-depth look at stop payment orders, how they work, what they cost and when they are effective.

What Is a Stop Payment Order?

A stop payment order is a request to cancel a payment before it’s been processed. Types of payments you might cancel include personal checks and ACH payments, like recurring monthly bill payments.

How a Stop Payment Works

Individuals can contact their bank or credit union to request a stop payment. After supplying the necessary payment information, the financial institution flags the check, if it hasn’t already been processed, and stops the check from clearing.

Stop payment orders typically expire after six to 12 months, depending on the bank or credit union. However, many banks allow you to renew a stop payment order if the check is still outstanding. Stop payment orders on ACH payments can last indefinitely. If your bank charges a stopped check fee, it may also charge a fee to renew the stop payment order.

How to Issue a Stop Payment Order

Stopping payment on a check isn’t difficult, but there are steps you should take to ensure its success.

1. Take action. It’s imperative to move quickly when requesting a stop payment so you catch it in time. The moment you know there is an issue is the time when you should be working toward a stop payment order.

2. Verify. Before contacting anyone, take the time to access your bank account online or on a mobile device to see if the payment has been posted yet. A stop payment order won’t help if you have a lost or stolen check that has cleared. At that point, you’ll need to report a fraud.

3. Gather check info. Your bank will ask for specific information about your check to properly track it and ensure it hasn’t been processed. Details the bank might request include:

• Photo identification
• Account number
• Routing number
• Recipient name
• Check date
• Check number
• Check amount

For ACH payments, you may be asked to supply other information, such as company name, account number, ACH merchant ID and the payment amount.

4. Contact your bank. The quickest way to set a stop payment order in motion is to call your bank directly, although you may be able to make a request online or in writing. Some banks may require you to complete a stop payment request form to start the process.

Contacting your bank by phone may require you to providewritten notification within 14 days, or the stop payment may expire.

Stop payment orders take effect as soon as the bank authorizes your request.

5. Contact the payee. Depending on your reason for requesting a stop payment order, you may want to contact the payee, if necessary, to let them know about the stop payment. Then, you can arrange for a new payment, if required.

Reasons to Stop Payment on a Check

There are several reasons an individual might request a stop payment, including:

• Incorrect information on a check
• A check mailed to the wrong address
• A lost or stolen check
• Insufficient funds in a bank account
• A dispute over a purchase or services rendered

Whatever the reason, it’s best to quickly act when you want to stop payment on a check.

Stop Payment Fees

Issuing a stop payment order often costs the bank account holder a fee. Fees vary by bank. Here’s a look at stop payment fees at several popular banks.

Some of the banks mentioned above, like Chase and Bank of America, waive stop payment fees for premium bank accounts. Be sure to check with your bank to find out how much it charges for stop payment fees on your bank accounts. Some banks do not charge a stop payment fee on a lost or stolen blank check.

Do Stop Payment Orders Always Work?

As mentioned above, you have to make the stop payment request before the bank processes the check, and stop payment orders can expire after a set time. If you choose not to renew an order, a payment may still get processed after expiration.

It’s also possible that a stop payment order gets inadvertently ignored, and your bank processes the payment. If that happens, the bank may be responsible for paying back any service charges, including the stop payment fee.

Not all payments are eligible for stop payment orders. For example, cashier’s checks and money orders do not qualify for stop payment orders. Because both require payment up front, funds are withdrawn from your account when issued.

Instead of stopping payment, you can opt to cancel a cashier’s check or money order, depending on the circ*mstances. Unfortunately, the cancellation process can take 90 days or longer for cashier’s checks and up to 60 days for money orders. You’ll also be subject to a cancellation fee in some cases.

Are Stop Payment Orders Legal?

Stop payment orders are legal and offered by most banks and other financial institutions. There are certain situations where it’s imperative to stop a payment from going through. Stop payment orders also protect consumers.

However, stopping a payment doesn’t leave you off the hook if you’ve entered into a contractual agreement that requires payment. While you may have stopped a specific payment, that doesn’t release you from any payment obligations. You could be subject to late fees and other negative consequences, including legal action.

The best way to avoid relying on a stop check order is to verify the information on a check or ACH payment is correct before sending it. If you have reservations about a payment or have issues with a payee, communicate with them before sending payment.

What Is a Stop Payment Indicator?

A stop payment indicator is a security measure placed on select unemployment claims to prevent payment. State unemployment agencies across the U.S. have seen spikes in large-scale fraud attempts. To combat this, some state unemployment insurance agencies (UIAs) have placed stop payment indicators on select unemployment claims requiring additional identification verification to receive payment.

If you receive a stop patent notice on your unemployment account, you’ll need to provide additional identification as directed to receive benefits.

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