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Finance · Payments

Debit (Payments and Account Entries)

Reference entry · last updated 20260910

A debit to a customer’s deposit account reduces its recorded balance. In double-entry bookkeeping, a debit is an entry whose effect depends on the account type.[1]

1. First principles: account perspective

A customer deposit is a liability on a bank’s books.[3] A debit reduces that liability. On an asset account, a debit increases the recorded asset instead. The terms debit and credit therefore require an account perspective.[1]

Illustrative example: a ₱500 outgoing payment debits a sender’s ₱2,000 deposit balance, leaving ₱1,500 before any fees or other entries. The receiving account can record a corresponding credit.

2. Direct debit as a payment method

A direct debit is a transfer initiated by the payee under the payer’s consent. A debit entry in an account can also result from a payer-initiated credit transfer.[2]

An outgoing InstaPay payment can therefore debit the sender’s account without being a direct-debit collection.

3. Debit and completion

The sender’s account entry and settlement between institutions describe different stages. A debit entry alone does not state which clearing or settlement arrangements the service uses.

4. See also

5. References

  1. OpenStax. Principles of Financial Accounting, §3.5.
  2. European Central Bank. Glossary: direct debit.
  3. European Central Bank. Glossary: commercial bank money.