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.

Pros and Cons of an Electronic Payment System

During this highly technological age, cash is trying hard to compete with electronic money, since nowadays a lot of people choose to use their virtual wallets. Here, you will read about the pros and cons of using an electronic payment system.

It is plain to see that electronic payment systems have more advantages than traditional banking services. Let’s see:

  • Saves on time

Money transfer from one virtual account to another may only take a few minutes, whereas a wire or postal transfer may take a number of days. Besides, you have to spend some time to go to the bank or post office and wait in line.

  • Controls expenses

Even if a person is willing to control his disbursements, it can take a lot of patience to jot down all the expenses, and this takes up a huge part of the total amount. On the other hand, the virtual account comprises the history of all the transactions, including the store name and amount spent. Best of all, you can check it whenever and wherever you like. In this case, an electronic payment system works to your advantage.

  • Reduced loss and theft risks

You will not make the mistake of losing or leaving your virtual wallet behind, and it can never be taken by robbers.

  • User- friendly

All services aim to reach out to a greater number of audiences and so, their interface should be easy for users to understand. Moreover, users can always ask help from the support team since they work 24/7. You can receive an answer by means of the forums as well.

  • Convenient to use

As long as you have access to the Internet, you can carry out transfers anytime, anywhere.

After discussing the advantages that come with using an electronic payment system, it is essential to talk about its disadvantages as well:

  • Restrictions

In every payment system, there is a limit with regard to the number of transactions you can do per day and the maximum amount you can withdraw.

  • Risk of Getting Hacked

Risks can be reduced when you follow the security regulations. This is comparable to the risk of being robbed. The situation can get worse when the processing company’s system breaks down, since this may lead to the leaking of confidential information on the online cards, as well as its owners. Though some electronic payment systems do not launch plastic cards, they can however be involved in Identity theft scandals.

  • The problem of money transfer from one payment system to another

Most of the time, electronic payment systems do not cooperate with one another. If that is the case, you can use e-currency exchange services. However, it can consume a lot of time when you do not have a service you can trust for this purpose.

  • Lack of Anonymity

Since the database of the payment system stores all your transactions – like the name of recipient, amount and time – the intelligence agency can access all your information. Decide on whether that is good or bad.

  • The Need for Internet Access

When you have no Internet connection, you cannot transact on your online account.

Ecuador’s Exclusive Electronic Payment System: To De-Dollarization?

After 15 years of taking a move in improving its monetary system, Ecuador is again changing its payment transactions, now with the help of digital currencies.

The South American country’s new monetary system, which fully kicked-off last February, was the first-ever state-run electronic payment system. Last December, Ecuador’s Sistema de Dinero Electrico allowed qualifying users to set-up their accounts.

The Ecuadorean government took this action to address its stumbling currency for the US dollar. The system is also designed to support the country’s dollar-based monetary system.

Among the advantages that this new monetary system offers is that it serves as the cost-saving mechanism for the government. Moreover, economist Diego Martinez, a delegate of the President of the Republic to the Board of Regulation and Monetary and Financial Policy said that aside from helping the poor, mobile payments will reduce the amount that the government will spend for exchanging old notes to US dollars.

One of the few first steps that Ecuador took is trying digital currency in paying taxi fares. The Central Bank of Ecuador signed a deal last February, involving 60,000 members of taxi organizations to accept electronic money. After this initiative, users will be able to select services and pay through mobile transactions. They can also send money between individuals. Later this year, the third phase of the electronic money system will allow users to pay for public services through mobile payment.

Ecuador’s new payment system does not require internet connection to be able to have successful transactions. Also it can be redeemed as physical money, and users will be able to make payment using their mobile phones and stored value on their accounts.

On the other hand, even the government cleared that digital currency does not aim to replace the existing payment system in their country, some professionals inside and outside Ecuador speculate that this step was taken by the government because of other motives. One of them is Mr. Lawrence White, Economics Professor at George Mason University. According to him, he found it reasonable for Ecuador to provide an exclusive medium for mobile payments. He sees this step as Ecuador’s maneuver to de-dollarization. He further explained that the government’s prohibition of Bitcoin last July is a proof that they have bigger plans, and sees it as potential move to exit US currency.

At the moment, the government still denies speculations that digital currency will allow Ecuador’s central bank to issue new money that isn’t straightly taut its U.S. dollar reserves.

Whether this step aims for de-dollarization or not, Ecuador took a major step in recognizing the advantages that digital currency is offering. This will surely have a large impact with Ecuador’s economy, positively or negatively.