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Today’s companies and consumers expect digital options in their daily transactions, and insurance claim payments are no exception. Increasingly, insurance carriers are looking to replace costly paper checks with more modern alternatives. And although ACH has been a great initial step into quicker fund transfer, virtual claim payments are fast becoming a smart check replacement because of the additional benefits they offer.
As its name suggests, a virtual claim payment card is not actually a physical card, but rather a unique 16-digit computer generated number that is created solely for a single-use between a payer and payee. It’s an innovative digital payment solution that simplifies and accelerates insurance claim payments to both suppliers and insureds.
Here are 5 ways in which virtual cards are improving the insurance claims payment process:
Using virtual cards is an extremely convenient and cost-effective way for insurers to issue claim payments to vendors and claimants. With no transaction or set-up fees, virtual card payments deliver immediate cost savings. They eliminate the tremendously high expense related to check creation, processing, and mailing. Reducing manual effort and streamlining the payment process increases operational efficiencies and allows for value added resource allocation.
Virtual cards allow suppliers and claimants to receive issued payments instantly. No more waiting to receive paper checks in the mail or making trips to the bank. The electronic delivery of virtual card payments is a secure process requiring payee authentication before any payment can be accessed. Once authentication is validated, recipients have immediate access to much needed funds, and insurers benefit from reduced claim payment cycle times.
For suppliers and claimants, virtual cards provide guaranteed payment with real-time approval. This allows for much improved cash flow and better cash management capabilities that drive stability, growth, and peace of mind.
Check fraud constituted 74% of all payment fraud cases in 2019.1 What’s more, a supplier or claimant’s exposure to fraud increases dramatically every time they must share or expose bank account information for checks and ACH payments. Since virtual card numbers are randomly created for a one-time transaction and specific amount, they significantly reduce exposure to fraud. Virtual card payments have forced expiration, and customers do not have to share or expose any personal information.
Detailed and timely remittance advice is a critical component of payment reconciliation. Without it, recipients can only guess what transactions coincide with the payment. For ACH payments, remittance information is limited to only 80 characters of space and may or may not be delivered with the payment notification. Virtual card payment remittances, however, are delivered at the same time as the payment notification and have no space limitation, providing valuable detail and enabling expedient reconciliation.
Virtual card adoption is expected to accelerate to over $5 trillion in transaction value by 2025, increasing from an anticipated $1.6 trillion in 2020.2 Insurers who utilize a virtual card claim payment program can drive expense reduction, shorten claim payment cycle times, improve cash management, and significantly reduce payment fraud exposure.
We’re here to help. One Inc’s comprehensive claim payment platform and established supplier network enable insurers to deliver a superior claim payment experience. Our ‘hands on’ supplier onboarding and optimization program assists carriers with supplier outreach and education, best practice implementation, data analysis and virtual card adoption.
To discuss your claim payment and supplier needs, please call (822) 209-1688 or email inquiries@OneInc.com
12020 AFP Payments Fraud and Control Survey (April 2020) https://www.afponline.org/docs/default-source/registered/2020paymentsfraudandcontrolreport-highlights-finalfinal.pdf?_n=8987
2B2B Digital Payments Stats for Merchants to Know in 2020 (paystand.com)
The One Inc Content Team strives to provide valuable insights about digital trends and payments innovation for the insurance community.
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