Insurers are accelerating efforts to digitize insurance processes, including payment processing. The rate of adoption for premium and claims/annuities payment gateways is increasing due to evolving customer expectations, the high cost of current processes, and a desire to enhance risk management and optimize operations. As insurers move towards a more digital experience, payment gateway vendors are improving their services to help insurers keep up with customer preferences and new industry regulations.
Customer Expectations
Customer experiences in industries such as retail and banking have taught consumers to expect easy access to information and quick, secure payment experiences. These expectations go beyond the payment plans that insurers typically offer; consumers are looking for more options, such as new payment methods (e.g., EFT, PayPal) and omni-channel capabilities (e.g., using phones, tablets, or PCs to make a payment).
Insurers often struggle to overcome the limitations of legacy systems and deploy functionality on new technology platforms without seeing an increased IT budget. IT organizations search for low-cost, effective ways to expand their capabilities and respond to consumer demands. Digital payment gateway adoption is on the rise to address these needs.
Risk Management and Operation Optimization
Optimizing operations has been a prominent driver of adopting digital payment gateways. Recently, digitizing payment processing has become more critical: COVID-19 and remove work have exposed the discomfort of handling cash and paper checks. High-volume, paper-based payment processing in a short period has highlighted costs that insurers don’t evaluate closely during typical times. Paper-based operations are creating business continuity risk and even health risks to employees during a pandemic.
Payment gateways are capabilities that enhance operations while lowering risk to the insurer. Credit card processing charges may initially reduce profitability, but using payment gateways allows insurers to charge users additional processing fees above their standard installment fees. Processing fees can help offset charges from credit card companies and can modify payment behavior by encouraging less costly e-check payment methods.
Vendor Landscape Trends
Vendors are working to improve user interfaces on a variety of platforms, often offering responsive design capabilities before insurers can expand their services to deploy their own. To stay competitive, payment gateway services providers have invested in mobile capabilities, added support for more payment types, and increased security to comply with banking regulations. Vendors also provide helpdesk services and customer analytics at a lower cost to insurers.
Insurer adoption of real-time payment (RTP) is also growing. RTP eliminates the delays organizations can experience with older transactional backbones. Though speed is the primary advantage of real-time payment processing, insurers have also benefitted from the captured transactional information data, which they can use to improve treasury measurement and enhance the customer experience.
More information on payment gateway and vendor landscape trends is available in Novarica’s report, Payment Gateways in Insurance: Overview and Prominent Providers.
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