What to know about insurance payment processing
Finding the right partner for your insurance business
If you are in the insurance industry, you know how important protecting assets and mitigating risk can be. After all, insurance helps customers mitigate their own risks. Accepting outdated forms of payments can be a risk to your small business, especially if policyholders fail to pay on time when using these outdated forms of payment. Luckily, there are better ways for your customers to pay. Since customers have the option to pay recurring monthly premium payments or all upfront, you’ll want to make sure you’re accepting the right forms of payment to streamline this process for them. While insurance claims and claim disbursements are another key component of your business, this article will focus on accepting payments as an insurer and not making claims payments or claim adjustments. Therefore, we’ll discuss the many different payment options available to your policyholders. Let’s start with detailing common payment methods for insurance payments.
What payment processing solutions do my customers expect?
Policyholders want the flexibility to pay their way, and that can mean different things to different people. A good payment experience is paramount to keeping cash flow at your business. So, let’s look at some of the most common payment solutions you should know about as an insurer in order to provide a good customer experience.
Automated Clearing House
This is probably the most popular payment method among insurance companies, especially for those who take recurring payments. Automated Clearing House (ACH) payments utilize the ACH network to electronically send payments from one bank account to another. The National Automated Clearing House Association (also known as NACHA) is the organization that runs the ACH Network; transfers between financial institutions usually take 3-5 business days to complete.
Once a policyholder sets up a recurring ACH transfer, they’ll be more likely to make on-time payments since their payments will be automated. They also won’t have to deal with the hassle of paper invoicing. As a business owner, one of the biggest benefits of ACH processing is that you save on processing costs. ACH transfers typically have lower processing fees than credit cards. That’s because this method is a bank-to-bank transfer and doesn’t require the high processing rates of card processing networks.
Electronic Funds Transfer
Electronic Funds Transfer (EFT) is a broad term that stands for a wide variety of digital payments. In fact, an ACH payment is technically a type of EFT. But there are other types of EFTs, including electronic checks (echeck), wire transfers, and even some ATM transactions. While the majority of premium payments are likely to come from ACH payments, it’s still good to know about EFTs and provide them as an option for your customers. When it comes to costs, ACH payments and echecks are the lowest cost option. Wire transfers do cost more but are available much more quickly than the other payment methods. That can help if your customers need to pay a bill quicker than they could with ACH payments.
Credit and debit card payments
While much less common for insurance premium payments, some customers still like to pay using their credit or debit cards. To accept credit card payments in person, you’ll need a credit card reader or payment terminal. For online payments, you’ll need a payment gateway so that your customers can input their credit card information to pay. You’ll need to work with your credit card processing partner in order to set both of these things up. No matter if you’re accepting payments online or in person, you’ll want to ensure that your payment processing partner meets the Payment Card Industry Data Security Standards (PCI DSS). These standards help protect your business and your customers and allow for secure transactions. Many providers also have an API that helps you seamlessly integrate a payments platform into your current systems, so taking payments is easy.
Over the phone payments
Some customers like to pay over the phone, and for insurance agents that process a large number of these payments, you should be aware of Interactive Voice Response (IVR) payments. This type of payment gives your customer a series of prompts when they dial an automated line, securely allowing them to input their credit card information to make a payment. For customers, this line is a 24/7 way to pay, so they can make a payment when it’s most convenient.
Now that you know about the various payment types you should accept at your insurance agency, let’s see how you can ensure that customers can pay you securely.
Making insurance payments more secure
Your customers rely on your insurance agency to protect what matters most. So, you want to make sure that they have the same confidence to protect their personal information when they make premium payments. Therefore, you’ll want to ensure secure payments and show that you’re doing everything you can to protect this sensitive information. Keeping your customers safe is all about implementing technologies that can help thwart fraudsters. From accepting in-person payments utilizing EMV-chip enabled card readers to utilizing all forms of payment authentication online, you can work with your payment provider to ensure the safety of your policyholders’ payments.
When it comes to running your insurance business, your customers should be your top priority. Ensuring their assets are protected is your job. But equally as important is ensuring that you can accept payments securely and on-time so that you can keep your business moving. With a wide variety of payment options, you’ll want to decide which makes the most sense for your business and work with your payment processor to implement them effectively and securely.
Ready to work with a payment processor who can help you accept premium payments?
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