Define: Automatic Bill Payment

Automatic bill payment is a service offered by financial institutions that allows customers to authorize recurring payments to be made from their bank accounts to pay bills. This service eliminates the need for customers to manually initiate payments each month, as the payments are automatically deducted from their accounts on predetermined dates. To set up automatic bill payment, customers typically provide their bank account information and authorize the financial institution to make payments on their behalf. This arrangement is governed by a contract between the customer and the financial institution, outlining the terms and conditions of the service. Customers have the right to cancel or modify automatic bill payment instructions at any time, and financial institutions are required to provide customers with notice of any changes to the service. However, customers are responsible for ensuring that sufficient funds are available in their accounts to cover the automatic payments, as failure to do so may result in fees or penalties. Overall, automatic bill payment offers convenience and ease of payment for customers, while also providing financial institutions with a reliable source of recurring revenue.

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This glossary post was last updated: 29th March 2024.