Selecting the appropriate payment platform for an agency involves a multitude of decisions that can be quite daunting. Given that this is not a decision you make on a daily basis, it’s easy to become distracted and risk neglecting crucial factors.
While there is no universal payment solution that suits every situation, by carefully considering the vital aspects, an agency can evade making erroneous decisions and greatly streamline the process of discovering a suitable payment platform.
The Changing Landscape of Insurance Payments
Customer needs, regulatory changes, and technological innovation have drastically changed the insurance industry. Today digital payment solutions are at the heart of this transformation. This isn’t just another trend. It’s a definitive step in the digital transformation that is revolutionizing the insurance industry as a whole.
As insurtech continues to carve out its place in the history of insurance, the implementation of digital payments has moved well beyond optional — it has reached a pivotal stage. When insurers offer digital payments, they stand at the forefront of innovation, offering the simple, efficient transaction experiences that customers have come to expect.
These efficient, secure, and convenient options help maintain high levels of customer satisfaction, and as many carriers know, is the standard necessary for creating the customer-centric environment that’s so essential for retaining and growing customers.
Now, the efficiencies, security, and flexibility of implementing digital payment systems also allows insurers to readily respond and scale to regulatory alterations, thus enhancing the customer experience quality they offer while also ensuring compliance.
Just the Facts
- Customer Expectations
More than four in five Americans used some form of digital payment in 2021, marking an increase from 78% in 2020 and 72% five years ago.
This shows a growing preference for digital payments over traditional methods.
- Insurance Industry Digitization Trends
67% of insurance carriers see the digitization of payments as an essential part of their digital upgrade plans, driven by their desire to reduce dependence on paper checks and minimize internal expenses.
- Global Payment Digitization
The total transaction value in the Digital Payments market is projected to reach US$9.46 trillion in 2023, demonstrating an anticipated increase in the use and acceptance of digital payment methods worldwide.
Key Considerations to Take When Looking for Payment Systems
- Costs
When it comes to outsourcing payment systems, the concern is not only the upfront costs but also the ongoing expenses, including transaction fees, monthly or annual fees, setup fees, and potential cancellation fees. And let’s not forget the hidden costs that can often catch agents by surprise.
- Non-compliance Penalties
In the case of non-adherence to certain regulatory standards (like PCI DSS for card payments), fines can be incurred. - Chargeback Fees
These occur when a customer disputes a transaction. - Upgrade or Feature Access Cost
Certain features or upgrades may be locked behind additional costs which aren't obvious initially. - Currency Conversion Cost
If your agency operates internationally, exchange rates and associated fees can add significant costs.
- Setup Time
It can be challenging to tackle the challenge of diving into a new payments system, weaving through software integration, empowering their staff with training, migrating data, and rigorous testing.
TIP: Look for payment providers that have a proven record of seamless integrations and rapid implementation to help navigate through setup time hurdles.
- Integration
The new system should be able to interact smoothly with the agency's current infrastructure, including policy management systems, CRM, accounting systems, and more. A lack of integration can result in fragmented operations and reduced efficiency.
TIP: Insurance agencies should look for flexible APIs and consider whether the payment provider's system can support their preferred method of billing (one-time payments, recurring payments, etc.)
- Security
Given the sensitive nature of financial data, security is of paramount importance. The payment provider should comply with industry standards like PCI DSS for card payments, and preferably use advanced security measures such as tokenization and encryption.
TIP: Choose a system that has strong anti-fraud measures in place. As cybersecurity threats evolve, the payment provider should also be capable of updating their systems regularly to mitigate these risks.
- Other things to consider
- Provider’s Reputation
- Scalability of Solutions
- Customer Service Quality
Conclusion
Today, insurance agents are looking for every advantage to optimize their performance and operations. One simple strategy that insurance professionals are turning to is outsourcing payment processing. More than just relieving the administrative burden, outsourcing payment processing can slash operational expenses. Rather than getting bogged down with the financial transactions, agencies can outsource the job to specialized service providers. This allows agencies to concentrate on the things they do best — deliver more personalized service in a responsive manner — to build overall customer satisfaction. Gaining an understanding of the strategies and intricacies of outsourcing will allow insurance professionals to adapt swiftly in a fast-paced market environment, allowing them the flexibility and fortitude to navigate potential disruptions and to take good advantage of new openings and thrive in a new era of insurance growth and innovation, based on advanced technologies and refreshed partnerships with customers of all sizes in the insurance industry.
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