APIs Bring Much-Needed Payments and Payouts Relief to Africa’s Insurance Sector

Money moves from a consumer to a business and often there’s a use case in which that needs to move back out whether as refunds, withdrawals and disbursements, said Kiaan Pillay, co-founder and CEO of South Africa-based FinTech firm Stitch.

To help simplify that two-way payment process for businesses and enable faster payments to customers, vendors, suppliers and employees, the firm recently launched Stitch Payouts, a product Pillay said can particularly accelerate the digitization of insurance sectors across the African region, starting in South Africa.

“Typically, in many cases, [insurance claims are] run in a batch only on certain days and someone often has to manually enter 5,000 claims payouts [that will be done over a couple of days]. Then it takes two or three days for the banking rail to settle [the policyholder so it can take] anywhere from three days to two weeks to [finally] get your money,” Pillay told PYMNTS in an interview.

Now with Stitch Payouts, he said insurers can automate settlements and enable real-time access to funds for policyholders through the company’s application programming interface (API), relieving pressure on finance teams in the process.

“It’s one API call across any of the banks here in South Africa and instead of needing either someone to do it manually or a payments operations team to do this on some sort of batch cadence, you can do it on a per transaction basis,” he added.

Insurance companies can simply embed the product directly into their dashboards or systems for their teams to use after which Stitch will clear the payments through a payments rail, he explained further.

In terms of how Stitch compares to other competitors offering similar digital solutions, Pillay pointed to their “core concept of linkage” and their ability to offer both a link payout and an unlinked payout service as their value add.

“What we are able to do is once you have linked [a payment] that first time, we can manage the whole process, whether it is for pay in or for a pay out,” he noted, adding that having previously verified the user’s identity and bank account details, insurers can subsequently do pay ins and payouts a recurring basis without any reversals.

Outside of the insurance sector, Pillay said FinTech players that operate wallets can also benefit from the product and enable customers to put money in and withdraw cash from wallets on a single API call and linkage on a recurring basis.

“We got quite lucky that organically demand came to be that we were able to facilitate both legs there instead of just one,” he said.

Simplifying Money Movement

Looking at the local South African market, there is an increasing demand from both consumers and merchants for multi rail, Pillay said. This is not necessarily limited to a desire for convenience, he pointed out, but also tied to the need for better prices and reconciliation.

“We’re starting to see consumers develop preferences. In the past, it was only card [payments] or only mobile money depending on the market, but consumers are starting to demand more viable options such as account-to-account cards, mobile money, or eWallets,” he explained.

This is the reason why the need to support and receive multi methods, including manual transfers which are still popular in South Africa, is becoming increasingly important. It’s an area Stitch is hoping to be well-positioned in to meet the digital and nondigital needs of both consumers and merchants alike, Pillay said.

Overall, he said simplifying the complex money movement and money management processes is where their focus will be moving forward, coming up with solutions to make it even easier for businesses to properly handle settlements and the timing around them, as well as better handle multi method payment options.

“A lot of this technology we [already] have internally, [and we’ll be looking at] ways that we can productize this and make it external [in the future], he said.

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