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Improving Direct Bank Payments with Imburse and GoCardless

September 22, 2022

This article originated from the Xero blog. The XU Hub is an independent news and media platform - for Xero users, by Xero users. Any content, imagery and associated links below are directly from Xero and not produced by the XU Hub.
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Direct bank payments are highly beneficial for insurers and customers alike. For insurers, they can reduce costs, improve the number of payments you collect, and increase cash flow. For policyholders, it makes the whole process simpler and cheaper.

Benefits for Insurers

Firstly, direct bank payments enable insurers to reduce costs on transaction fees, as their fees are typically lower than credit card processing fees. Direct bank payment fees are approximately 1-2%, compared to 2-3% when using credit cards to process payments. With direct bank payments, insurers have stronger control of their payment cycles and a healthier cash flow, as there are fewer risks of failed payments.

Credit card transactions fail 8% of the time, as credit cards can expire or be blocked due to fraud or unpaid credit limits, or cardholders may have insufficient funds due to maxed-out credit. Furthermore, customers change credit cards more often than they change current accounts. This makes direct bank payments a safer and more stable method of collecting premiums.

Benefits for customers

Policyholders benefit from setting up a direct bank payment with their insurer too as they no longer incur the interest fees by paying for policies on credit using their credit card. In addition to this, customers will no longer miss any monthly invoices when their credit cards are maxed out.

In fact, in a survey looking at payment preferences, consumers in the UK, Germany, and France all preferred to pay via direct bank payments. Even in the US, where card payments dominate, 21% of respondents said they prefer to pay household bills via direct bank payments.

Source: Xero

The rise of direct bank payments

The popularity of direct bank payments, mainly in the form of Direct Debit, has been rising for the last couple of years due to the integration of digital mandates. According to Statista, Germany, the UK and France have seen the highest increase in Direct Debit payments from 2000 to 2022. The UK registered a staggering 4.4 billion Direct Debit payments in 2019, with 9 in 10 people having at least one Direct Debit set up with their bank account. Research conducted by YouGov found that more than half of UK residents prefer using Direct Debit to pay for their online subscriptions. Direct Debits are vital in the payment processing of insurance policies, yet they are not unified across countries.

The world of payments is packed with innovative solutions and providers, but the biggest difficulty lies in navigating through this ecosystem, understanding what is right for the business, and doing technical integrations with providers. What is more, this ecosystem is continuously changing, which requires insurers to be agile and adaptable in order to keep up. These are key barriers that hold insurers back.

Imburse’s integration with GoCardless

Clients that use Imburse can effortlessly benefit from our integration with GoCardless and instantly start offering Direct Debits to their customers. Once connected to us, insurers can execute both SEPA and Bacs Direct Debit, servicing their customers in the UK and European zone.

The Imburse platform provides an automated Direct Debit scheduler, which enables insurers to automate their recurring payments. Insurers are also able to access a paperless management tool that allows them to easily store, update and manage Direct Debit mandates. When integrating with multiple Direct Debit networks through Imburse, insurers get unified reporting across all the sources, as Imburse streamlines data from all the different providers and serves it via single-stream (webhooks or GET responses). Imburse also provides unified instructions, so insurers can safeguard themselves against provider lock-ins and switch to other providers when necessary.

Total number of direct debit payments in 27 countries in Europe from 2000 to 2020

Source: Statista

The role of Imburse

Imburse is a cloud-based payments middleware connecting large enterprises to the payments ecosystem, regardless of their existing IT infrastructure. We do all the heavy work of integrating with payment providers and technologies. Through a single connection to Imburse, enterprises can collect or payout using any payment technology and provider, in any market.  

Aside from enabling insurers to connect to the entire payments world, our platform offers a range of capabilities to ease the insurers’ day-to-day operations. These include connected interfaces such as hosted pages, payment files, and web components, as well as reporting capabilities such as unified reporting, through webhooks and GET responses.

Imburse partners with key players with the likes of Accenture, Guidewire, and EY to distribute our solution through core systems and system integrators. Our clients include renowned insurers such as Generali, Swiss Re, Iptiq, and Beazley.

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 or Payment Service Provider.

The role of GoCardless

GoCardless allows money to flow directly between merchant and payer by enabling people to pay directly from their bank accounts. Our powerful APIs, global network and open banking leadership unlock the ability to make and accept direct bank payments confidently and securely. We put businesses in control of their payments, helping them to get paid faster, reduce costs, win and retain more customers and stress less. Businesses can lower their operational costs by up to 56% when using GoCardless to process their payments.

Why leave it there?

To find out more about Imburse

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