CheckMate Changes Checks for BSR

Microplastics. The smell in the break room when someone microwaves salmon. Paper checks. 

Some things linger, despite our hopes otherwise.

And so, we adapt.

The inefficiencies of paper check payments drove ePayPolicy’s founders to create their core platform for online payments 8 years ago. They saw how most other industries took payments, and knew they could help insurance organizations like theirs make the leap.

And now, agencies, MGAs, PFCs and carriers get paid faster. Problem, meet solution – right?

The Persistence and Pain of Checks

“There are still people out there who feel that a paper check is more secure,” says Vickie Harmon of Bailey Special Risk. “That’s their preconceived notion. And then there are others who tell us their owners don’t allow them to pay online.”

The combination of digital payment preferences in the 18-34 age bracket and the surge in online payments driven by the pandemic has proven to be lasting. B2C consumer preferences for fast, flexible and secure payments have bled into B2B transactions. And paper checks are anything but fast, flexible and secure.

“Just getting checks to the office is a pain,” said Harmon. “Someone could send a check from 2-3 hours up the road, and a week later, it might get to us. Then someone has to open it, scan it, and reconcile it back to (Vertafore’s) AIM.”

A 2022 McKinsey study affirmed what most already know – 9 out of 10 Americans utilize digital payments. Online payments are faster, more secure, and commonplace. But compared to most industries, the insurance space has an above average amount of holdouts still using checks. 

“We look at the amount on the check. If there’s a comma, we might take it to the bank today,” joked Harmon. “If not, maybe we’ll wait until the end of the week and see if another one comes in.”

“We know that our customers love the ease of online payments,” said ePayPolicy CTO Nish Modi. “But they’re still getting these checks – in some cases, despite their best efforts. We started thinking, could we make check payments as easy as their online payments?” 

More than a lockbox

Some large insurance organizations utilize generic bank lockbox solutions to offload the administration associated with check handling at the offices, especially with multi-location companies. But not all lockboxes are created equal, and many come with high and fluctuating fee schedules, long-term contracts and insufficient integration with insurance management and accounting software.

“We could have had a lockbox at any point, but then it would just be a matter of them emailing us the information,” said Harmon. “We’d still have to spend the time to manually enter all of that.”

Feedback like this led to the development of CheckMate – the first integrated, secure lockbox solution built just for the insurance industry. When it came to rethinking the lockbox concept, Modi’s team was adamant that CheckMate would be built to integrate with the actual management and accounting systems being used today.

“A lockbox without the (Vertafore) AIM integration doesn’t save me anything, other than maybe it gets to the bank a little quicker.” Harmon added. “But with CheckMate, there’s no manual entry.”

As an integrated insurance solution, CheckMate works in 3 simple steps:

Secure, Daily Collection – Checks are routed to the closest CheckMate lockbox location for daily collecting, batching and processing.

Dashboard Details – Check images and remittance details are viewable in the ePayPolicy dashboards, so there’s just one dashboard for all your payment types. No additional software required. 

Magic Invoice Matching – Customers that connect their accounting systems can utilize CheckMate’s intelligent scanning to match payments with open invoices, eliminating double work and repetitive data entry.

“With CheckMate, the deposits get to the bank faster – by at least 1-2 days, and what used to be 2-3 minutes per check to process has become 2-3 minutes per batch,” said Harmon. “We don’t want to have to spend our time processing checks, we’d rather spend it servicing our customers.”

CheckMate is now available for insurance organizations looking for an integrated solution for modern check payments and accounting.

The Myths of Check Payment Security

In today’s fast-paced digital world, where cashless transactions dominate, it may seem archaic to discuss the use of checks for payments. Yet, checks are still very much in circulation, and many insurance companies rely on them for various reasons. There’s a common misconception that paying with checks is a secure and foolproof method. In this blog, we’ll debunk these myths and reveal why paying by check can pose a significant danger for both the business and the paying customer.

Myth 1: Checks Are a Safe and Reliable Payment Method

One of the most persistent myths about checks is that they are a safe and reliable way to make payments. Many people believe that since checks are a tangible form of payment, they must be secure. However, this perception doesn’t align with the reality of the modern financial landscape.

The Truth: Checks Are Vulnerable to Fraud

The U.S. Postal Inspection Service reported roughly 300,000 complaints of mail theft in 2021, more than double the prior year’s total. Postal authorities and bank officials have warned Americans to avoid mailing any checks if possible. As cases of fraud increase, it is also taking more time for victims to recover any stolen money.

Checks are also risky for businesses receiving them as payments. Criminals can easily create fake checks or modify legitimate ones to redirect funds to their accounts. Once a fraudulent check is deposited, it can take time for banks to detect the fraud, leaving businesses to bear the financial loss.

Myth 2: Checks Offer a Paper Trail for Accountability

Another myth surrounding checks is that they provide a clear paper trail for tracking payments and holding parties accountable. This perception often leads businesses to believe that checks are a reliable way to handle transactions. Payers may also think that businesses must believe them when they say they mailed a check that hasn’t actually arrived.

The Truth: Checks Create Administrative Hassles

While checks do generate a paper trail, they also create significant administrative burdens. Businesses must manually process each check, which consumes valuable time and resources. Moreover, the paper trail can be easily manipulated by dishonest parties or the check can be lost by accident.

The sheer number of times a check must be passed from hand to hand while it is being processed means there is less and less security available. Tracking becomes complex and error prone, leading to potential financial discrepancies.

Myth 3: Checks Are a Cost-Effective Payment Method

Some businesses and payers view checks as a cost-effective way to collect payments because they don’t involve transaction fees associated with credit card payments or digital wallets.

The Truth: Hidden Costs and Inefficiencies

Accepting checks may appear cost-effective on the surface, but when you factor in the hidden costs and inefficiencies, the picture changes. According to a Bank of America study, the costs of processing one business check ranges from $4 to $20, when taking into account stamps, envelopes, reconciliation, etc. Businesses must invest in equipment like check scanners, which can be expensive. The time spent on manual processing and addressing issues related to checks can also offset any perceived savings.

Checks are also expensive and tedious for payers. Though credit card payments often involve fees, individuals (including business owners) often earn rewards for paying by credit card. And if they rather not earn points for a lower fee, an ACH option usually offers that.

Myth 4: Checks Provide Quick Access to Funds

Many businesses believe that when they receive a check, they have immediate access to the funds. This misconception is partly due to the fact that checks are often cleared within a few days.

The Truth: Check Holds and Bounced Checks

When businesses go to deposit paper checks to their bank, it takes time away from making those funds immediately accessible. Not only that, but banks may place holds on check deposits, especially for larger amounts or from unfamiliar sources. Furthermore, checks can bounce if the payer’s account has insufficient funds or if they close the account before the check clears. Bounced checks can result in financial losses and additional fees.

For the payer, it can be unclear when the funds will be cashed, making it difficult to plan and prepare for premium payment dues.

Myth 5: Checks Are Preferred by Customers

A lot of insurance companies believe that their customers are very traditional, and prefer paying with paper checks. “That’s the way we’ve always done it”, is what we hear often.

The Truth: Changing Customer Preferences

Customer preferences have evolved over time, and many now prefer the convenience and security of digital payments. Accepting checks exclusively may alienate potential customers who expect more modern and efficient payment options. The Federal Reserve has been tracking payment trends since 2001. Their most recent report states that debit and credit card payments have increased by 8.9%, while paper check usage has decreased by 7.2%

Avoid Risk and Inefficiencies

The primary goal of insurance is to manage and mitigate risks. Yet, many insurance providers still jeopardize their financial health by adhering to outdated payment methods. Modern consumers seek convenience without compromising security. While checks may have been a prevalent payment method in the past, the reality today is that they come with a host of security risks and inefficiencies.

Insurance companies should reassess their reliance on checks and consider embracing more secure and efficient payment solutions, such as credit card payments and electronic fund transfers. These modern options not only offer better security but also streamline the payment process, reduce administrative burdens, and provide a better experience for both businesses and customers.

About ePayPolicy

Over 6,500 insurance companies trust ePayPolicy to speed up inefficient payments with an easy-to-use, connected platform. We allow your business to collect credit card and ACH payments online while also offering an automated check collection and reconciliation tool that makes checks as easy as online payments (because some customers just can’t give up the checkbook). Our custom payment page is branded to your business, linked to your unique URL, and backed by PCI Level 1 Security. Learn more about how it works here.

Download the Check Security Myths Infographic here: