What does automated bill payment refer to?

Automated bill payment refers to a service that facilitates the transfer of funds directly from a consumer's bank account to a creditor's bank account without requiring manual intervention from the consumer. This process allows consumers to set up recurring payments for bills, such as utilities, loans, and credit card payments, ensuring that these obligations are met on time.

The key characteristic of automated bill payment is its ability to streamline financial transactions by automating the payment process, which reduces the risk of late payments or missed bills. This system is particularly beneficial because it handles the mechanics of moving funds electronically, often through ACH (Automated Clearing House) transfers, thus enhancing efficiency and convenience for both consumers and creditors.