Stop payment definition
/What is a Stop Payment?
A stop payment is a request made to an entity's bank to not honor a check that the entity has issued to a payee. The notice may need to be in writing. The bank will then enter a block flag into its accounting system that will reject the check when it is presented for payment. The bank charges a fee for this service, which is deducted from the entity's checking account. If the bank then pays the check to a payee, the bank is liable to the payer for the amount of the check.
There are several reasons why a stop payment may be issued. For example, the payables staff may have learned that they paid the wrong amount, or sent the original check to the wrong address, or learned after issuance that the check should not have been issued at all.