Auto Insurance Electronic Payment Policy Retention

Many auto insurance companies have seen the benefits of having their clients on automatic payments that are taking electronically from the insured bank account monthly. The policy retention of the clients that have electronic funds transfer for installments is more than double that of the direct bill clients.

Having significantly higher policy retention benefits the insurance company in many ways. There is less paperwork that needs to be done for clients that are cancelled for non-payment, there are less midterm cancellations, and more of the client’s policies mature to receive the loyalty discounts that are offered.

When an insurance company offers a loyalty discount it is less likely that the insured will be able to find a more competitive rate with another carrier. In California, if the insured were to get quoted from new insurance companies the new companies will not be able to offer a discounted rate because the client has had continuous coverage.

In return the insurance companies offer these electronic payments to client multiple times. Some insurance carriers offer this to the client on almost every communication. The companies will also offer lower billing fees to these clients that elect to have their monthly payment taken from their checking account.

There has been some debate in the industry about the level of responsibility of the clients that choose EFT monthly installments. Some say that these clients are more financially responsible and would have the higher retention regardless of the policy billing. Either way, the insured will be able to save each month on the billing fees associated with the policies. In some cases the saving could be as high as $10 per month.

How Can We Ditch Our Wallets for Our Electronic Payment Future in the Age of Hacking?

Last week, I was sitting on the Starbucks patio, sipping on a Frappachino, I watched a car pull up into the drive-through, and the gentleman took their smart phone and waved it over a smart phone reader which deducted the cost of his coffee from his Starbucks card which was inside of his smart phone as an app.

That was a pretty cool trick, it just goes to show you that in the future your smart phone will be an all-in-one device, and will also serve as your credit card, and your customer loyalty card at the grocery store, and all the other businesses that you shop that. There’s only one problem with all of this, and that is the computer security of your smart phone, and the fact that the hackers can break-in.

There are so many components to all this, you have your 4G wireless company, the maker of the smart phone, and all the software programmers to create the apps. Therefore there are too many chances for gaps in security, and unless these transactions are 100% secure, someone can break-in to your phone, and therefore they’ll have access to your bank account as well.

On July 7, 2011 Google officially announced the end of the of the wallet, which shouldn’t be too surprising considering all the partnerships being announced between smart phone manufacturers, cell phone companies, and banks. On May 2011 there as an interesting piece in a Guardian article titled; “Google Wallet: A Big Deal or Another Buzz? Google is right – replacing credit cards with smarphones is a great idea, but will it work?” by Jean-Louis Gassee.

There was an interesting article by Adam Hoffman of (Electronic Receivables Department at CitiGroup) in Global Finance in June of 2011 which was extremely interesting as he was discussing the future of electronic payments. The article was titled “What’s Next in the World of e-Bills and e-Payments,” and he reminded the readers of the incredible future these technologies will have and what that means to changes in money flow.

This is quite incredible stuff, and these new technologies are totally leading-edge, but we’ve already seen the challenges and security holes in nearly all of the smart phones and their operating systems. How can consumers feel safe, and until they do how can the industry including the banking industry, credit card sector, and the makers of these devices convince the public that it’s okay and safe to use electronic payments in the age of hacking? Indeed I hope you will please consider all this and think on it.

Why the Germans Do Not Prefer Electronic Payments

The world of payments is rapidly moving towards the digital options. However, still several customers use cash and they finalized their transactions by using actual cash.

Industry experts are predicting that cash will be obsolete in a few coming years. However, there is a European country which is following a totally opposite trend. In Germany, the use of physical cash is more than any other country in the world. According to a research conducted by Federal Reserve, the people of Germany use cash in 82 percent of their financial transactions. 13 percent of these transactions are executed by using debt cards while only 2 percent of the transactions are carried out using credit cards. Germans keep more cash in their wallets as compared to the amount carried by people in other countries. On average, each German keeps $123 in his wallet. As per the research, the average amount kept in the wallet by Germans is almost double as compared to the quantity of cash kept by people in other countries. Americans keep $74 in their wallets, on average, while the people of Netherland carries $51.

The people of Germany not only like to pay in cash but also, they want complete freedom to do so. A recommendation to limit the use of cash faced extreme opposition from consumers and political experts. According to Guardian’s report, there was a ban imposed in Germany on making any payment via cash which has worth more than 5 thousand pounds. The purpose of this ban was aimed at stopping money laundering and the use of cash to support terrorist activities. Such bans are commonly imposed in other countries of European Union but in Germany, this suggestion faced strong criticism by the majority of the political groups.

According to Guardian, the head of Germany’s Central Bank, Jens Weidmann said while talking to the journalist of Germany’s newspaper named “The Bild” that if Germans get the impression that the use of cash is going to be gradually restricted in the country, it can prove to be actually fatal.

Even the newspaper was also against this suggestion. In February 2016, the newspaper published an open letter and urged the readers to sign it and send it to the finance minister.

The commitment of German people with the use of actual cash is so strong that most of the people are storing the cash in their houses. As per Wall Street Journal, the majority of Germans are withdrawing their money from banks and storing it in the safes inside their houses. This trend is so intense that a vault making company reported 25 percent increase sales increase in the first half of the year 2016. Several other such companies are delivering their maximum production in order to meet the increased demand of vaults.

Why do Germans Prefer Cash?

Despite the fact that electronic payments have made the things extremely easy for the people, why Germans still prefer physical cash over electronic payment? One reason for this is the security. Germans believe that payments via physical cash are more safe and reliable as compared to electronic payments.

To cater these issues, it is recommended that such a payment partner should be chosen which is compliant with the standards of data security. Moreover, the payment processor chosen by German people should accept several payment options. Online traders can only accept electronic modes of payment, but if Germans are provided with multiple payment options, they can easily choose the one which is best suited to their needs and expectations.

According to the Wall Street Journal, another reason behind German’s hesitation regarding the electronic payment is inflation. Because of the negative interest rate implemented by the European Central Bank, the Germans have to pay for making the deposit into the bank. Furthermore, the history of hyperinflation also made the people of Germany reluctant towards the use of online payments.

Because of the fact that the payment systems continue to get more and more advanced, it is expected that with the passage of time, the Germans will also move towards electronic payments, especially, when they have to make international payments. Business companies have to work hard in order to reach German people, but these companies shouldn’t give up.