Seven Questions to Ask Before Selecting a Payment Services Partner
These days, online payment acceptance is a requirement for many insurance providers. If you want to be competitive, it’s a must.
But the partner you pick matters. The wrong solution can mean heavy fees, limited options and slow cash flow. The right solution, on the other hand, will improve collection efficiency, improve your combined ratio and increase policyholder satisfaction.
Below are seven questions to help you find the right solution.
1. Does it meet the needs of all of your customers?
Different demographics have different expectations for how to pay, but not all systems support the whole range – so make sure that your solution meets your needs. Some customers prefer to pay by credit card. Others like ACH. Forty-two percent of Millennials expect to be able to use their iPhone or Android device; to serve them, you’ll want your payment system to integrate with your branded mobile app. Meanwhile, 25 percent of Generation X use P2P options. Older users may prefer to call in their payments using Intelligent Voice Response (IVR); to serve them, you’ll need to integrate payment functionality with your phone system, ideally with built-in usability features like customizable prompts and multilingual options.
2. Does it support recurring payments?
It should. As of 2016, only 32 percent of the country’s payments were set up on a recurring basis, but in insurance, the importance of recurring payments is hard to overstate. They protect you from late payments and non-pay cancellations, and they boost policy renewals; they can also increase customer satisfaction.
Your system must support a variety of payment intervals – monthly, quarterly, semi-annual, and annual – to align with different customers’ preferences. Also, in addition to handling the transactions themselves, your system must make it easy for customers to enroll and manage recurring payments online, with features such as electronic signatures to facilitate the process.
3. What kind of fees are you facing?
Fees – especially for American Express payments – can eat up to 40 percent of your premium volume. But there are ways to adjust for this. Find out if you can offset the cost of credit card transactions by passing a service fee on to your customers. The potential savings here are not to be underestimated; about a quarter of your premium is typically paid by credit card, and the fees on those numbers add up fast: for example, if you have $25 million of premium processed by credit card, a two percent transaction fee will cost you $500,000.
Before you buy, find out what you’re in for – and what your options are.
4. How long does it take for money to get to you?
If your payment processor is going to make you wait a few days before you can access your funds, you could be in for a cash flow problem. Look for an option that brings your money home within 24 hours. In addition to freeing up cash flow, this will add efficiency to your accounts receivable, allowing you to reconcile payments to transactions that occurred within the last day.
5. How does it protect your data security?
Your payment processing solution must be PCI DSS compliant, of course. Still, data breaches happen all the time. What additional safeguards does it offer?
6. What about the logistics involved with system integration, equipment, fees, contracts?
Does your solution integrate with your policy administration system? Not everyone needs an all-in-one solution, but for many businesses, it makes more sense to consolidate offerings with a full integration than to use two separate tools. System integration aside, will you need to acquire any equipment for the new system? Will you be facing any setup fees? Are there any long-term contracts?
7. Does the vendor have a stable presence in your industry?
Does your partner have a track record that speaks to their credibility? Do they work with other companies like yours? The conversations you have with a prospective vendor should make you feel optimistic and empowered, presaging the service you can expect to receive from your new partner. Don’t ignore your gut.