The full form of PAP in banking is Pre-Authorized Payments.
Understanding Pre-Authorized Payments (PAPs)
Pre-Authorized Payments (PAPs) are a convenient method for managing recurring bills or investment contributions. They allow you to authorize a company or organization to automatically withdraw funds from your bank account on a regular basis.
Benefits of Using PAPs:
- Convenience: Automate your payments, so you never miss a due date.
- Reliability: Ensure your payments are made on time, every time.
- Efficiency: Save time and effort by eliminating the need to manually pay bills.
Common Uses of PAPs:
According to the provided reference, PAPs are frequently used for:
- Mortgage payments
- Utility bills
- RRSP contributions
- Insurance premiums
- Charitable donations
Example of PAP in Action
Imagine you have a monthly mortgage payment. Instead of manually logging into your bank account each month and initiating a payment, you can set up a PAP with your mortgage lender. They will then automatically withdraw the agreed-upon amount from your account on the designated date each month.
