How Much Are Paper Checks Costing Your Agency?

by Business Strategy

In your office, do you send coworkers letters instead of emails? Do you hand-write invitations to meetings and deliver them to everyone’s desk? Do you post physical to-do lists on everyone’s office door? Then why would someone hand-write and mail paper checks?

How Much Are Checks Costing Your Insurance Agency? 
In the digital age, people avoid paper materials due to the inefficiencies. Physical transactions waste time and money, create the possibility for confusion, and are an unnecessary use of resources. Now, 80% of businesses are seeking ways to convert paper checks into digital payments. 

So, are paper checks outdated? Yes. In fact, it’s possible for banks to consider them “stale” after only a few months. The Federal Reserve Study estimated 28 billion checks were processed in 2009 with a decline of 1.2 billion every year since. At this rate, they estimate paper checks will become extinct by 2026. 

While the need for paper checks is shrinking, the cost is not. In a study conducted by the Aberdeen Group, $7.78 was the average cost of a paper check, while Bank of America reports a cost of $4 – $20 factoring in mailing and processing. Bottomline showed processing a check costs a business ten times more than an ACH transfer, and receiving a check costs five times more than an ACH payment. That’s a lot of money being spent on receiving money. 

Let’s Talk About The Customer Experience
Customers crave flexibility, convenience, and speed. Paper checks cost them all three. They don’t want to reach for a checkbook, pen, envelope and stamp before running to the mailbox just to make a payment. The same Federal Reserve Study states paper check usage has decreased by 7.2%, and debit and credit card payments have increased by 8.9%.

We live in a world where there are online services for everything. Customers want and need, to be able to pay for their insurance from anywhere at any time. Slow payment systems like the paper check increase wait times and add the layer for human error to the process.

The Security Risks That Come with Paper Checks 
Paper checks increase the customers risk for fraud and identity theft. In its 2015 Deposit Account Fraud Survey, the American Bankers Association says that check fraud accounted for 32 percent of the industry’s $1.91 billion in losses in 2014. 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. This also implies an increased risk for your agency to even receive the payments. 

The mail itself offers little security, and someone could easily steal the bank account and routing numbers for an account from a physical check. Your customers trust you with their largest assets and the safety of their banking information. Digital processing creates a secure environment to receive payments and keep accurate records while eliminating these risks.

The Environmental Impact
A growing consumer concern over the last decade has been the environment and our negative impact on it. Customers like to know the companies they do business with are green-conscious.

Take paper receipts for example. Have you noticed a trend of customers saying no to printed receipts and receiving them electronically? People view paper checks as equally not preferable. The check creation process involves water, gas, trees, and releases greenhouse gases. Once the check is processed, it will most likely end up in a landfill, adding to more waste. Moving to a greener, digital solution will not only create positive PR but will have a powerful effect on the environment. 

Have questions on how you can move away from paper checks? Reach out and schedule a demo to learn why ePayPolicy is the simplest solution for you to collect credit card and ACH payments for your insurance agency.

Studies used for this posting include…
The 2019 Federal Reserve Payments Study
2019 AFP Electronic Payments Survey
What is Check Fraud 

The Madness of Paper Checks & Insurance Payments

by Digital Payment Processing

The Madness of Paper Checks & Insurance Payments

I’ve always loved a good analogy, as it makes concepts concrete and relatable.  With March Madness underway I couldn’t help but turn to that annual phenomenon — the office pool — to help put what we do here at ePayPolicy into perspective.

With an estimated $9 billion bet on these games, participation obviously starts with an entry fee. Now I’ve been in pools with hundreds of people and in pools with only 10 people. Regardless of the pool size, the rules are simple now: digital payments only. Why? It’s only logical. Digital payment is instantaneous and it makes the pool easier to manage.

Using tech to provide simplicity

Imagine you’re the office pool  commissioner. Imagine trying to work with a steady line of people dropping off checks and cash throughout the day. In addition to creating, distributing, collecting and scoring the bracket sheets, you’ve added a whole other layer of headache to contend with: money. It takes time  for you to endorse and deposit and make sure those checks clear before you officially accept the payer into the pool. That causes a time delay neither of you can afford. Oh yes, and don’t forget about dealing with those people who inevitably wait till the last minute to pay their fee before tip off. What if their check bounces? Do you bounce them out of the pool, too?

Paying by check for a March Madness pool just slows the action to a crawl. Meanwhile, the games are scheduled and the Big Dance is in full swing. People are on high alert, boning up on stats and itching to make their picks. They  don’t want to have to remember to cut a check (like, who keeps their checkbook with them at work in the first place?), sign it and drop it off at your desk. If you’re not there, they have to follow up to make sure you got the check.

Old methods work but are they the best option?

And even paying by cash is a drag. Having the exact entry fee in cash is not impossible, but it’s pretty rare for people to walk around with that kind of green in their wallet.  In these days of credit cards and Apple Pay, you’re basically requiring participants to go the ATM. An added step for them.

And what if someone forgets (several days in a row) or is traveling and can’t get you a physical payment in  time? You either have to cover their fee initially or not allow them to participate. If you choose the latter, that’s a smaller pool and a smaller payout to the winners.

You can quickly see how cash or check payments can make your commissioner job much harder  than it needs to be. And the added pressure on everyone to pay in an an inconvenient way creates a barrier to participation. Here you are, inviting them to the biggest sports betting event of the year, but making it harder instead of easier to get their bracket in.

Where ePayPolicy’s digital payment service fits in

Now here comes the analogy part. In this scenario the office pool commissioner is you, a busy insurance agent or broker. The  participants are your clients. You have something they want. They’re ready and eager to pay to play. So why are you putting up barriers? Because that’s exactly what’s happening when the only methods of payment you accept from  your clients is a check or cash.

Now here’s the thing. Yours may be  the only March Madness pool in the office. But out here in the business world, your clients have their choice of insurance agents and brokers.  Paying by check is as much of a time-wasting hassle for them as it is for you. Your clients are used to paying for virtually everything else in their lives electronically.

Moral of the story? If you want to make it as easy for your clients to pay their premiums as it is to buy into the office pool, give us a call at ePayPolicy.  We guarantee they’ll be excited about doing business with you — long after their March Madness bracket has busted.

Top 3 reasons to stop accepting checks

by Digital Payment Processing

Top 3 reasons to stop accepting checks

Checks became common practice in the late 17th century and have somehow survived hundreds of years of financial evolution, but that run could be coming to an end. We’ve come up with three reasons why you should shift to digital payment solutions. 

Inconvenience
Consumers use checks, because we’ve always used checks. We often overlook the numbers of steps it takes to pay a bill by check. From finding the checkbook to finding stamps, envelopes the mailing address, to the outgoing mail box. When a consumer starts paying with electronic checks or credit cards they never turn back.

Long Wait Time
Merchants that receive payments by check get paid slower. Whereas credit card payments are processed and hit a business bank account in one to three days, the average time it takes to receive and process a check is 15 days. If you want to speed up your receivables, stop taking checks.

Checks Bounce
Credit card payments are denied immediately, but checks can bounce. Not only does this lead to longer wait times (see above), the resulting fees and administrative time needed to track down payments costs businesses valuable resources. 

We know that many businesses can’t stop taking checks, but offering digital payment alternatives is a step in the right direction. Migrate customers to digital payment solutions and you’ll be glad you did.

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