Saturday , June 15, 2024

How Insurers Have Proven To Be a Big Growth Market for Digital Payouts

The advent of real-time payments, account-to-account transfers, and card-based disbursements is making it easier for consumers to receive claims funds much quick than waiting for a paper check. State Farm Insurance Cos. is one of the latest providers with its release earlier this month of Digital Pay, a service provided by Fiserv Inc. that enables digital claims payouts. 

With the new service, customers can choose an automated clearing house payment, take the cash direct to a payment card, or use PayPal, Venmo, or a PDF check. A PDF check is an emailed image of Check 21-compliant check that consumers can deposit using remote deposit capture technology.

Fiserv’s Carat unit, which launched in November, is handling the service for State Farm. Insurance companies and many other types of businesses are eyeing digital payouts because they provide speed and accuracy for moving funds to consumers, says Nandan Sheth, head of Carat and digital commerce at Brookfield, Wis.-based Fiserv. 

Sheth: “At a high level, there is significant opportunity for digital transactions and payments. More than 60% of these payments are still made using checks.”

While State Farm is among the latest, Sheth says it is emblematic of the businesses seeking out these services. “At a high level, there is significant opportunity for digital transactions and payments,” Sheth says. “More than 60% of these payments are still made using checks.”

State Farm sees Digital Pay as a way to speed up payment delivery, while giving its customers a choice in payment method and making it easier for them to enroll in the service. Fiserv provides an application programming interface code to enable the service with State Farm. 

“We really focused on business-to-consumer,” says John Beisner, vice president of Carat and digital commerce. With insurers, one challenge was digitizing the “last mile” that actually touches their customers, Beisner says. “They needed to digitize ASAP.” Carat enables them to pair the payment to the customer and to improve the user experience, he says. 

Other industries like these elements, too. One example is an unnamed airline that is considering digital payouts as a way to reimburse travelers for lost luggage or to pay compensation if they are bumped from flights, Sheth says. 

Sheth says there’s been “explosive growth” in the business over the past 12 months to 18 months, something he forecasts will accelerate. The number-one reason for this prediction is that many organizations will want to lower their costs and get the best value for these services. Digital payments also can be a differentiator, he says. And some segments, like insurance claims, are well suited to speedy digital payments, he says, as are other markets such as cryptocurrency wallets, online gambling, and gig workers.

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