When you can pay anyone, you can pay everyone.
In an interview with Karen Webster, Drew Edwards, CEO of Ingo Money, said payout networks — like payors themselves — need to offer payors choice of payout “use cases.” In other words, let the payment fit the situation.
Providing one network to streamline transactions — ranging from simple to complex — is no easy task, not when it comes to digitizing those payments and moving away from the paper check.
As Edwards noted, even the most basic payments — one to one — involve some level of complexity and tech heavy lifting. P2P payments, gig platform to gig worker payouts, or insurer-to-policyholder transactions all fall under this “simple” umbrella. That payment involves the authentication of the receiver and the authorization to send the money.
Payments get increasingly complex when new roles are introduced into the mix. Multi-party one-time, ad hoc and recurring disbursements reflect the fact that life is never all that simple — so why should we expect payments to be?
There are many payments that involve multiple parties, that may require informed consent or formal approval from interested third parties, that may involve progress payments executed in series for which both the payment amount and payment terms require alignment and approval (for example, in the case of a lienholder) and payments to alternate or designated receivers on behalf of an actual beneficiary.
Edwards pointed to insurance carriers as an example of typically more complicated payments scenarios that could include more than one sender and receiver. There are supplier payments, attorney payments and lienholder payments to manage. A joint policyholder situation is the simplest of these examples, he said. “Let’s say you have two receivers, a married couple — how are you going to pay them electronically?”
It means building digital workflow processes around those complexities, making sure that both people in that scenario are engaged, that they’ve both authorized the payment — and that the money will go where it’s supposed to go.
Edwards said through the use of APIs, Ingo Money could “digitally engage with both of you and enable either party to serve as approver or payment recipient in a simple, straightforward way.”
Then, with the engagement of both parties, he said, Ingo can push payment — in much the same way two people might endorse the back of a check to approve a joint deposit.
Body Shops And Beyond
He offered another scenario, where a body shop fixes a car and is owed money, but the insurance company won’t pay until the owner of car signs off on the repair.
In that digital engagement, it’s important for there to be communication with the body shop (the recipient), and the owner (the approver) to make sure that all parties are in agreement and the payment is set to go out.
The actual steps and process that must go through in a digital environment is more complex than anybody would imagine, said Edwards. The insurance example proves that point: The state of Texas, for example, requires insurers to pay an insurance claim in fewer days than other states. But in the paper-based world, the way the rules work, when those insurers cut the check and put it in the mail, they’ve done their part.
“It doesn’t matter if it takes recipients three weeks for them to actually get the check because they’re on vacation and then cash the check. But when you make that a digital on demand transaction, you’ve got to make sure they’re paid within five days,” he said.
Small and medium-sized businesses (SMBs) add another role into the mix, he said, as the recipient is actually an entity, so it’s imperative to ascertain that, for example, the SMB employee is authorized to make approval (and that the bank account belongs to the business and not the person). Factor in changes in staffing, where someone who was authorized yesterday might not be authorized today … and you get a sense of how complex it all can become.
The issues and frictions are especially acute for insurance companies, said Edwards, where, in his own observations, Ingo might see a million insurance disbursements a month, but only 15 percent of them are single-party claims. The vast majority, then, are multi-party or joint-party claims.
Thus, he said, payments become as much about the workflow as they do about the act of the transaction. Drilling down a bit, the payment is the last component of the accounts payable process, tied to point of sale (POS), tied to the information transfer. Making complex payments as streamlined and efficient as simple ones (insurance disbursements through Ingo, he said, take minutes where they once took days), means the approval process must be built into the payment itself.
To build that approval into the payments, he said, Ingo is building a universal network for recipient identities and those recipients’ payment preferences.
“It’s the same network from our standpoint,” he explained. “The directory is ‘tagged’ as a business registry with authorized individuals and login credentials. Then there’s a consumer directory, but we will tie those individuals back together [within the] network” to help with fraud management efforts. As he explained to Webster, “If you’re a bad actor we can shut you down in all of those places, the same way we’ve done checks nationwide to reduce deposit fraud … for our clients.”
Streamlining the complexity of the payments, said Edwards, has gained adherents quickly in the insurance industry — he noted that nearly 100 percent of adjusters among Ingo’s clientele have embraced digital payments, which eliminates any guesswork about when checks are disbursed or when payments are received — with positive ripple effects across the board.
As Edwards told Webster: “Everything is amplified when there are complex payments, but so is the delightful experience” for customers.