When it comes to money, it’s easy to make a mistake, especially when you’re dealing with multiple payments to multiple vendors at any given time. Fortunately, a stop payment can do exactly what it sounds like – stop the payment! Below we will explore what a stop payment is, how to make a stop payment, and all the applicable fees involved.
Key Points
- A stop payment is a request you make to your bank to cancel a cheque or pre-authorized payment that has not yet been processed.
- There is no guarantee that the payments will stop, especially if you don’t make the request in a timely manner.
- If the cheque has already been cashed after you issue a stop payment, you will need to contact the recipient to ask for the money back.
What Is A Stop Payment?
A stop payment is a request you make to your bank to cancel a cheque or pre-authorized payment that has not yet been processed. Once a stop payment is requested, anyone who tries to deposit the cheque you issued or process a pre-authorized debit may not be able to do so.
What Are Common Reasons For A Stop Payment?
Stop payments are requested for several reasons, including the following:
Lost Or Stolen Cheque
If a cheque was misplaced, stolen, or lost in the mail, a stop payment can help prevent an unauthorized individual who gains access to the cheque from cashing it.
Incorrect Amount On A Cheque
If you wrote the incorrect amount on a cheque that is already in the recipient’s possession, requesting a stop payment will give you an opportunity to correct the amount before the cheque is cashed.
Insufficient Funds
If you don’t have enough money in your account to cover the cheque amount, you can issue a stop payment to prevent an NSF charge if the cheque bounces.
Suspicion Of Fraud
If you’re concerned about a potentially fraudulent transaction, requesting a stop payment on the transaction can hold the funds while the issue is investigated.
Whatever the reason might be, it’s recommended that a stop payment be issued immediately.
How Do I Make A Stop Payment?
Making a stop payment is quite simple. The most important thing to know is that timing is the most important factor to ensure the money is not transferred or the cheque is not cashed.
Here are the steps to making a stop payment:
Step 1: Gather The Information You Need
To stop a payment, you need the following information:
- Cheque number
- Cheque amount
- Date of the cheque
- Name of the person it was made out to
Step 2: Make Sure The Payment Hasn’t Gone Through
Review the transactions on your chequing account to make sure the payment has not yet been processed.
Step 3: Make The Request
Call your bank to request the stop payment by providing all the information in the first step. After you’ve made the call, reach out to your bank to get the stop payment confirmation in writing. Some banks allow you to make stop payments online, which would allow you to get the documentation in writing at the same time you make the request.
Step 4: Pay Applicable Fees
Unfortunately, stop payments are not free. Once you’ve made the request, pay any applicable fees to your bank to confirm the stop payment.
How Much Does A Stop Payment Cost?
Banks typically charge a fee for a stop payment. Such fees tend to remain relatively consistent among Canada’s Big Five Banks:
| Bank | Cost |
| TD Bank | $12.50 |
| RBC | $12.50 or $25 |
| Scotiabank | $12.50 or $20 |
| BMO | $12.50 |
| CIBC | $12.50 or $20 |
| National Bank | $16 to $30 |
| Desjardins | $12, $13 or $20 |
Are Stop Payments Legal?
Stop payments are legal in Canada, but they should only be requested for reasonable situations, such as incorrect amounts or potentially fraudulent activity.
There are some important considerations to make:
Legal Contracts And Bill Payments
If the payment you want to stop is associated with payments on transactions linked to legal contracts, like a loan or rent payments, there may be consequences. For example, stopping a payment on a loan could lead to penalty fees or even legal action from the other party. It could also potentially hurt your credit.
Recurring Authorized Payments
If the payment you want to stop is for recurring payments or automatic debits, you can legally stop these payments. However, you may first want to contact the other party to cancel the authorization. A stop payment only applies to a single transaction and does not stop the merchant from trying to process the transaction again at a later date.
Are Stop Payments Always Successful?
Unfortunately, not all stop payments are successful. Even after issuing one, there is no guarantee that a stop payment will work. The following are some limitations you may face, depending on your situation:
Type Of Payment
Certain types of payments are difficult to stop. These include things like certified cheques, since they guarantee funds to the recipient. Some electronic transactions, such as debit card payments, may also be difficult to stop once they’ve been authorized.
Recurring Transactions
Stopping a payment with the bank alone may not be enough when it comes to automatic or recurring transactions. The merchant may still make attempts at future transactions, so you’d be well-advised to cancel the authorization directly with the merchant.
Timing Of The Stop Payment Request
When it comes to making a stop payment, timing is crucial. You’ll want to make the request as soon as possible so it is handled before the transaction is processed. Once a cheque has cleared or an electronic payment is started, stopping payment may not be impossible.
Bank Processing Delays
It’s possible for there to be delays with your bank when processing a stop payment request. Such delays could allow the payment to go through.
Final Thoughts
Mistakes can happen when writing a cheque or initiating an electronic payment. In these cases, you may want to consider a stop payment. Just keep in mind that timing is of the essence, and no guarantees can be made that the stop payment will work.
