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Insurance Providers - how to choose the right payment partner

Summary

When choosing a payment partner, insurance providers must consider their desire for direct communication with the provider, geographical limitations, types of payment processing methods required (ecommerce, M sales (eOTO, inCommerce, M-person). Providers should decide betweenOTO, in-person), and the need for using separate gateway a payment gateway and/or merchant account. Providers and merchant account services or opting for an all vary in their risk appetite and-in-one solution, taking into account their desire for control and fees, especially for unique insurance services. Payment methods, including management capabilities. Payment methods offered local preferences and and their competitive Buy Now Pay Later options, pricing, including options like BNPL, are are crucial. Features like Level 2+ also crucial. Additional considerations include3 data, fraud tools, multiple settlement accounts the ability to, and dynamic currency conversion can pass enhanced data enhance transactions. to increase acceptance Pricing structures, interchange fees, gateway fees, and specific payment method costs must be assessed alongside payout speed and rates, the currency control. Integration with existing software and quality customer service can pricing models ( significantly differentiate providers. For a tailored selection of payment providers, services like Shuttle Broker can be consulted.blended fees vs. interchange ++ fees), the speed and currency options for payouts, software integrations, and the quality of account management and customer service. Shuttle offers a broker service that can help insurers shortlist suitable payment providers and provide pricing guidance.

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Introduction

Whatever you’re selling there is one factor that typically skews who the right payment provider is for your business. It’s simply this - do you want to talk to this service provider?

Some people don’t want to talk to their provider and are happy to interact via chat online if there are issues or questions, they just assume that their provider is optimising everything for them. To others, this sounds like madness and not the kind of business relationship that they want.

The number one reason merchants ask us for a new payment provider is down to a customer service problem, which is usually downstream of them having issues or not achieving the acceptance rates they would hope for.

We have insurers using many different payment providers despite the fact that they’re in the same market and business. One might use a smaller newer provider and another might use a larger incumbent.

With that said here’s what insurance providers need to consider when shortlisting payment provider options.

Geography

Payment providers can only operate in countries where they have a license, so the choice is firstly limited by geography. For businesses that sell internationally they might want to consider payment providers that can deal with a greater number of currencies and geographical markets because this increase the likelihood of selling locally and reduces the cost of selling internationally; alongside being able to manage FX exposure.

What are you selling?

Less of a consideration for insurance brokers, but still not all payment service providers will want to work with you. Payment providers have a risk appetite and will assess and the fees they want to charge you accordingly. If you’re insuring billionaires who fly to the moon then perhaps you’re less likely to find a willing service provider

Ecommerce, phone or in-person

Some payment providers only offer ecommerce processing, which means that they do not have a terminal hardware for in-store payments (face to face or bricks and mortar). So what do you need?

Ecommerce = Payments via a web or mobile interface, this includes where a QR code is used or a virtual terminal is available (since it’s software on a device).

MOTO = Mail Order Telephone Order payments via these channels need to flagged accordingly, not every service provider do these, but most do.

In-person via terminal hardware = Payments with the customer via a physical terminal or phone (acting as a terminal), historically the most trusted way to accept a payment. Not necessary if your business is entirely online.

Gateway and merchant account vs All in one

You’ll need a merchant account and payment gateway if you’re going to accept a card payment online. Some providers only offer one of these e.g.

Authorize.net⁠

or Opayo or

Acquire.com⁠

are just payment gateways. And your bank might just offer a merchant account but not a gateway. Then there are the service providers that are an all-in-one solution and they’ll just set everything up for you e.g. Stripe or PayPal.

The final category here is where the all-in-one provider is called a Merchant of Record (MoR), this is where they are the one actually receiving the payment, dealing with chargebacks and tax etc, they just pay you the net amount after all fees at the end of the day e.g. Square. This can be good if you don’t want to deal with some of the admin and issues around accepting payments.

For larger merchants (insurers) there can be an advantage of going with a separate gateway and merchant account provider, although it is likely to be onerous in setup. The benefit is that the gateway can probably route payments to a number of different merchant account providers (acquirers) to process the payment, which often can result in cheaper processing and increase acceptance rates. Basically you’ve got more knobs to twiddle.

So do you want more control or less control, a fully managed service or not?

Payment Methods

Most payment providers offer the major payment methods now, like Apple Pay. But if you’re selling to locale that uses a particular method e.g. iDEAL in the Netherlands or even BACS in the UK, then you will need to work with a provider that not only has these methods but also are priced competitively.

Also, consider payment methods like Buy Now Pay Later (BNPL), payment gateways typically only work with one BNPL provider and so the one that might be relevant for your industry and customers might not be available. Fortunately, Shuttle allows you to connect BNPL independently as well as Apple Pay/Google Pay, so you can have the best of breed in checkout from any provider (with some caveats).

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Here’s the top payment methods by country >⁠

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Data & Features

Some payment gateways allow you to pass Level 2 + 3 data points upstream, this increases the likelihood of a transaction being accepted and reduces the price of the transaction because fraud is less likely. Other features that don’t get talked about often but are important if you want a sophisticated payments operation are:

ability to pass raw card details, some providers don’t allow this which means you’re limited to the channels and methods that you can use to accept a payment, it always has to be done using the technology built by the gateway, which might not be compatible or available with what you need.

use a hosted gateway page vs not use a hosted page, a hosted page is where the customer gets diverted to a checkout page created by the gateway. This can be good because the gateway keeps it up to date with all their payment methods etc, but it can also be bad from a customer journey perspective since the you lose the customer to another website,

fraud tools to prevent criminals and chargebacks.

ability to connect multiple settlement accounts, you would want this for either currency reasons or delineation between entities.

add sub-merchant accounts, again this is about managing the organisation of where payments get processed and settled.

dynamic currency conversion (DCC) provides the ability for the customer to choose the currency they’d like to pay in and have that conversion done in real time.

Pricing

Most people get hung up on pricing, but pricing payments is neither simple nor transparent. And we’d go even further to say that you should look at the holistic cost of accepting payments when consider how much is the cost of sale (see video below for more information).

The other thing to say here is you’ll find vast differences in pricing for different payment methods, even just for cards. So why the big spectrum, well usually it simply comes down to whether or not the payment provider is having to use a third party to deliver the service (and mark it up).

There are two types of pricing models in the market when it comes to card payments. The cost to accept a card payment has a number of fees that make up the total fee for the merchant, fees from the scheme e.g. AMEX, fees for the interchange (how much the issuing bank makes for moving the money) and the acquirer fee (how much your bank makes for receiving the money). There are also FX fees for international cards and settlement to the merchant account, don’t be fooled FX fees are often hidden and are where the service provider can make a lot of money from the business. Some providers don’t charge FX, but they’re typically only working with larger merchants.

Blended fees

This model is usually positioned towards smaller businesses from providers like Stripe and PayPal, it can be advantageous but can also be very costly depending on who you’re selling to. The blended rate is one simple price for any type of card, be it debit card or credit card, AMEX or Visa.

Interchange ++ fees

This fee structure is much more transparent and can be a lot cheaper for merchants.

Gateway fees

Typically there will be a gateway fee, which usually the +£0.20 you see that’s added. Some payment providers do not charge this fee because they are making their money from processing the transaction (they are the merchant account provider as well).

Costs of specific payment methods

These will be priced individually by your payment gateway or if you go direct to the payment method, e.g. £0.20 for a direct debit transaction.

Payouts

How fast will the money get into your bank and account and in what currency is what you really need to know about payouts.

Speed - if you’re new to the payment provider they might be slower to settle the money e.g. 7 days. Unless you’re using an account to account payment method that is instant you typically won’t see instant settlement on any payment method. The quickest is typically one business day.

Multi-currency - Having control over currencies is important if you’re accepting payments from around the world, as well as being able to connect multiple bank accounts for settlement. The reason being is that having control over foreign exchange can save or even make you money.

Integrations

There’s no point signing a contract with a payment provider to find out they are not connected with the software you want to use and then you have to paying a lot of money to get the integration done, that just wipes out all the fee negotiation you’ve done with the provider, procurement can be costly in large organisations. Integrations are also important for syncing data for accounting or reconciliation purposes. When you shortlist payment providers make sure to check their integrations compatibility.

Account management

As we mentioned in the introduction, customer service is a major differentiator in the payments space, because aside from geography, risk appetite and technology, customer service and how the payment provider helps you accept more payments is key to success. Some providers only provide human interaction once you’re of a certain size and volume, which can be frustrating. For example (a real one), what if some Natwest cards were not approved as a pattern, well you need a human to look at this and provide a solution quickly but a chatbot or less experienced customer service agent might not provide a solution quick enough.

Shuttle Broker Service

If you pass Shuttle your requirements, we’ll shortlist the right payment providers for you and tell you what you can expect from as a pricing guide on the fees. We’ll also put you directly in touch with the correct sales person.

Enter your details in our marketplace and we’ll get you started >⁠

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General advice video

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