What is a Stop Payment and How Do I Make One?

What is a Stop Payment and How Do I Make One?

Written by Veronica Ott
Fact-checked by Caitlin Wood
Last Updated October 6, 2020

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.

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What is a Stop Payment?

A stop payment is a request to your bank to deny a payment you previously made. Once a stop payment is made, anyone who tries to deposit the cheque you issued or claim the payment you made, they will not be able to do so. The cheque or payment will instead be returned to your bank account. 

People usually make stop payments for lost or stolen cheques. However, there are many other reasons a person could make a stop payment such as sending a cheque for the incorrect amount or to the incorrect address. In other words, stop payments are performed to correct an error.

Cheques, pre authorized debit payments, and electronic payments can be ceased with a stop payment. Keep in mind that with pre-authorized debit payments it’s best to contact the recipient directly about stopping the payment instead of your bank. On the other hand, stop payments cannot be done with a cashier’s cheque, money orders, or debit card transactions. Stop payments must be made by the account holder. 

Sometimes banks will make exceptions to these rules depending on the circumstances. If you’re unsure if a stop payment is allowed, it doesn’t hurt to reach out to your bank to see if they will approve a stop payment.

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How Do I Make a Stop Payment?

Making a stop payment is quite simple. Contrary, timing is what you need to be concerned with the most. So long as the cheque hasn’t been cashed by the recipient yet, the bank will ensure that the cheque will not be cashed in the future. Below is the process of making a stop payment.

  • Gather the Information You Need. To stop a payment, you need the cheque number, the amount of the cheque, the date of the cheque, and the name of the person it was made out to for the cheque you want to cancel.
  • 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. 
  • 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?

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Should I Make a Stop Payment?

Bad things happen, sometimes we make payments in the wrong amount, to the incorrect person, or send it to the wrong place. Stop payments are your saviour at this point, they act like an undo button for a faulty payment. However, the convenience and relief of this service come with a fee. 

It’s really up to the account holder to decide whether or not the fee is worth cancelling the payment. Sometimes you can work with the vendor to stop and correct the payment instead, as most are understanding that mistakes happen. It all depends on the situation, options and constraints.

What is the Legality of a Stop Payment?

Stop payments are meant to fix an error, you shouldn’t use stop payments whenever you feel like it. If you decide that you don’t want to make a payment merely because you don’t want to make the payment, that is a violation which could be considered illegal or fraudulent. Keep in mind that stopping a payment doesn’t eliminate the money you owe, it simply corrects an error which will then be fixed and paid later. 

Final Thoughts

When it comes to money, mistakes can happen. Thankfully, stop payments undo any mistakes that happen for a reasonable fee. To avoid stop payments, always double-check the payment amount, vendor name, and mailing address before you issue it. All of this is merely a part of managing your finances, 

Rating of 4/5 based on 6 votes.

Veronica is a writer who specializes in creating unique and educational personal finance content. She has extensive experience writing blog posts for companies in the financial sector. Veronica's background is in accounting as she graduated from Western University in 2017 with a degree in accounting. She is passionate about using her accounting expertise to help others with their personal finance questions and issues and enjoys using her writing to educate Canadian readers. When Veronica is not writing, she enjoys film, reading, travelling, going to the gym, and listening to music.

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