What does Automatic payment mean?
This is an automated, routine payment made from a mutual fund, banking or brokerage account to vendors. The automated function can be initialized by the bank with the checking account, the source of the customers funds, or the merchant or vendor to whom the payment is owed. The billing is fairly simple an electronic payment system is set up, like the Automated Clearing House (ACH).
Even, regular payments, like installment loans, can be easily automated from source funds. This implies making arrangements with the appropriate bank where the account exists, in order to make the exact, monthly payment. The account holder typically creates a set of instructions for the client online.
More often, the power to withdraw funds from a checking account is given to the vendor, in order to automatically charge the client for whatever amount is owed that month. If the vendor is not known by the financial institution in question, the bank may ask the account holder to pre-approve the vendor for the power to manipulate funds. Ultimately it is the account holder who decides whether the automatic payment happens or not. The customer has the power to turn the automatic payment function on or off at will, or to postpone it.