An automated bill payment is an electronic system that automatically takes a set amount of money from the customer’s account or credit card every month to pay a bill. The customer sets this up, but there are various ways of authorizing the bill payment to ensure that it goes through. There are various advantages to this, such as making credit card processing much easier, but there are also some hidden disadvantages.
The customer sets up the automated payment either through the vendor or their personal bank. For example, the customer can go to the vendor’s website and specify a monthly payment for a certain amount and date. The customer can also go to his or her bank, select their merchant account or checking account and then specify when the payments occur. Though uncommon, the customer may have to go through another step of contacting the bank to let the establishment know that the payments are authorized. This typically occurs if the bank is not familiar with the company receiving the money.
Automated bill payments are electronic and automatically initiate credit card processing or account credits to pay the bill in question. This ensures that all of the customer’s bills are paid on time without the need for human intervention. People regularly forget about their bills, especially if there are many of them, so this system makes it much easier to accurately pay each and every bill throughout the month. When you’re finished with the bill, you can easily stop the payments with a few clicks.
Though the disadvantages are uncommon, they should be known about. Perhaps the biggest disadvantage is that the payments are static. For example, if you specify that $300 per month should go to a credit card, then that’s all that will be deducted from your merchant account or checking account. If your bill exceeds $300, the system will not compensate by sending more, which means that you might not be paying the full extent of your bill if it fluctuates.
Another disadvantage is that this creates a false sense of security. Just like people, automated payments are not infallible. There may a hiccup in the system that prevents your payment from going through. You should check every month just to ensure that the payments have been deducted from your account. It’s better to be safe than sorry if you want to avoid fees or underpaying bills.