Payments is a crucial area for any company. Thankfully, there is a growing number of providers and technologies that cater for every need and every market. The challenge isn’t therefore the lack of providers, but the difficulties in integrating them into existing IT systems. Companies with traditional infrastructure struggle the most in integrating new technologies, which prevents them from offering customers the seamless payment experiences they expect. In this article, we dive deep into PSP integrations, the challenges behind multiple integrations to PSPs and how to overcome them.
PSP stands for Payment Service Provider, also called Payment Processor. Each PSP supports a range of payment methods and payment schemes, usually listed on their website. Every company need to partner with a PSP to make payments or take payments from their customers. However, whilst some smaller companies may be good enough with only one PSP integration, large enterprises require multiple PSPs. The need for multiple PSP integrations comes from having to support large customer bases in different parts of the world, each with different payment needs. For instance, businesses that operate mainly in America may need to support American Express and Discover, as those are two of the most popular payment methods in the US (Statista report).
Insurance is very much focused on collecting payments for premiums and paying out claims. Payments is a crucial business area to nail, because it is the most important interaction that insurers have with their customers. It is, essentially, the make-or-break moment that will prove the efficiency of their products or services. No matter how great a policy is, if the pay-out process is delayed, complex and cumbersome- this leaves a bad impression on customers and may even make them consider purchasing policies from another insurers.
Global insurers have customers all over the world, each with different necessities and in very disparate situations. In order to fulfil the needs of each one of their clients, insurers need multiple PSPs that support a vast array of payment methods. This is the best way for insurers to ensure that their customers are covered, and that all payment processes are as efficient as possible.
Insurance is a traditional industry, with most global insurers being at least a few decades old. Whilst they have changed a lot over the years, they still have the same core IT systems to support all business areas. These IT systems are old and incompatible with the newest technologies. Integrating new technologies can be, therefore, a very cumbersome process that requires long interactions to different core systems, interfaces, customer frontend and back-office. This translates into the need for a lot of internal resources, financial investment, as well as a months-long wait for the integration to be finalised.
In spite of these cumbersome integrations, insurers are still very much reliant on payments. They need to pay their customers’ claims, but also brokers, vendors and suppliers. Moreover, they receive their payments for premiums on a flexible basis: either monthly, quarterly, semesterly or annually. This means that unsuccessful payments may have implications in the coverage of the policy or in the payment of brokers.
The insurance sector is very intermediated, as well as heavily regulated. There are a lot of requirements to comply to, both internally and externally, and PSPs need to complement that. However, insurance isn’t a business with big transactional volumes, making it an unappealing deal for the most relevant payment providers. This is an additional factor in the business case that may not justify the integration. Taking into account all of these factors, is it no wonder that the insurance industry struggles to keep up with customers’ payment needs. However, adapting to digitalisation is crucial to move forward, keep customers happy and maintain a strong position in this highly competitive market.
Imburse is a cloud-based middleware connecting large enterprises to the payments ecosystem, regardless of their existing IT infrastructure. Through a single connection to Imburse, enterprises can collect or pay out using a variety of payment technologies and providers around the globe.
In a world where consumers payment preferences and technologies are ever-evolving, Imburse works with insurers to future-proof their payment requirements. Regardless of the business area, market, or requirements, Imburse will connect you to your choice of technology and provider.
Reach out to our team below should you want to discuss how Imburse can help you. Our team is happy to show you what our platform can do for your business and offer you a free demo.