Margins are lean in the insurance industry, so looking for ways to save money and cut back on expenses can be a great value. And the beginning of the year is a great time to start.
You probably already have a good sense of the regular costs of doing business, whether that’s payroll or office supplies, or travel expenses. But you might not realize how much payment processing fees may be eating away at your profits.
Many payment processors charge unnecessary monthly and development fees to insurance agents and companies, just to offer the convenience of credit card and ACH processing to their customers. Add this to the fact that the payment processor is already charging the customer a transaction fee. This amounts to something I call the “double dip”: The provider is charging both the insurer and the insured for the same transaction.
Now would be a good time to check with your online payment provider about your contract, go over the various fees that they charge and ask if there are alternatives.
Payment providers don’t have to charge insurance agents and companies additional fees, they choose to charge them. Monthly service fees, monthly statement fees, PCI compliance fees, and even development fees are just add-ons to make more money. Transaction fees on the other hand are a fair-fee usually charged to the insured for the convenience of using a credit card or ACH. But this fee can also be absorbed by the insurer or split with the customer.
This year, you can take control of your margins and stop paying unnecessary fees just for the ability to offer this simple convenience.
While you’re at it, make sure that your online payment provider works seamlessly with your workflow, offering the tools and features you need to create the best experiences for you and your customer. Having invoicing, recurring billing and text and email notifications at your fingertips greatly speeds up receivables and improves cashflow.
Here are four questions you need to ask to start taking control of your bottom line and stop paying needless processing fees:
1) Is your provider charging extra fees on top of the transaction fee?
2) Does development work and customized integration cost extra?
3) Is your provider charging additional fees for the tools and features you need for a robust payment solution like invoicing, batch invoicing, recurring billing, email and text notifications?
4) If you need the payment provider to develop a custom solution that works for your specific needs, will that be an additional fee?
If the answers to any of these questions are yes, then you’re simply paying too much. Make this the year that you cut your processing fees and reduce them to zero.
By Duke Williams, Founder of Simply Easier Payments