ACH Pull for Insurtechs: Payments built for scaling
Last editedMay 20233 min read
ACH Pull is perfect for scaling insurance businesses. We look at how it can help you get paid faster, safer and cheaper.
Collecting premiums is fundamental to the success of any insurance business.
To begin with, collecting and processing payments in house can feel manageable. As you start to grow, however, keeping up with your scaling ambitions can become overwhelming.
Manually managing payments is a complex and expensive task. Research from Forrester found that most businesses employ teams of up 20 people to help manage payments. This can be a huge drain on your time and money, right when you’re trying to maximize revenue and scale your business.
In order for your premium collections to keep up with your speed of growth, you need a payments solution that reduces manual inputs and helps to scale the amount of payments you collect.
ACH Pull is perfect for scaling insurance businesses. With ACH Pull, you can automatically pull payments directly from your customers accounts, automate reconciliations and payment retries and save time and money.
Automating your premium collection processes with ACH Pull can provide cost and time savings in three key areas; fees, operational and management costs and payment inefficiencies.
We’re going to look at three 3 key ways that ACH Pull can help your business grow and thrive.
ACH Pull fees carry cheaper fees compared to all other payment methods. This means that before you even get to any operational or payment efficiencies that ACH Pull brings, you’re already making a considerable saving to your bottom line.
Payment methods and their fees:
ACH Pull - 1% + $0.25
Credit cards - 2-2.5%
Checks - From $4.00 to $20.00 (BofA)
Wire transfers - Up to $20 for domestic transfers (U.S. Bank)
Cashing checks, reconciling payments and chasing customers is labor intensive for your teams.
By focusing on payment management, focus is taken away from work that will help towards wider business goals that will keep your business competitive.
Forrester research suggests that most businesses can have up to 20 employees managing payments. This costs you time and money. IDC research shows that 24-27% of the overall cost of taking payments is spent on labor to recover failed payments.
Even small gains in automation of your processes can reap massive benefits. The PWC 2021 Financial Effectiveness Benchmarking Study found there are plenty of time saving opportunities to be had with automation.
Opportunities to automate the finance function:
26% reduction in the time spent on customer billing
26% reduction in the spent on financial/external reporting
28% reduction in time spent on credit management
24-27% of the overall cost of taking payments is spent on labour to recover failed payments. IDC
Payment inefficiencies mainly come in the form of payment failures and fraud.
Payment failures are a costly inefficiency that is often left unaddressed. Reducing failed payments can save you precious time, money, improve cash flow and protect your relationship with your customers. ACH Pull payments only fail 2.7% of the time on the first try. Card payments fail up 8% of the time and digital wallets 11%.
When a payment fails, a negative experience with the customer can be triggered if you’re managing payments manually. Chasing the payer can take time and cause friction. If the payment is not successfully recollected, the customer can churn. In fact, 11-15% of failed payments can result in customer churn. Even a small reduction in payment failures can dramatically reduce the cost and time spent managing payments and reduce customer churn. It’s a win-win.
$200,000 is the average cost of failed payments, including fees, labor and customer churn, for corporate sized businesses in the US (Accuity).
Fraudulent payments can be a direct drain on revenue and also a drain on your resources preventing and dealing with fraud.
For US Businesses:
62.3% of merchants feel fraud is a top threat
1.75% of revenue lost to fraud
6.33% of revenue spent dealing with fraud
33% are worried about credit and debit card fraud
According to Statista, globally cards and credit cards experience the highest amount of fraud. Because cards are an extra link in the payment chain, they’re more susceptible to fraud. ACH Pull, automatically pulled from one bank account to another, is a lot less vulnerable to fraud.
Payments that grow with you
ACH Pull is the perfect way to streamline and optimize your payments process.
To begin with, it has cheaper fees than other methods such as cards and checks. With the savings in both time and money that can be made from operational optimization and payment efficiencies, the benefits quickly add up.