At the dawn of a new decade, healthcare stands poised to embrace digital payments, and finally kill the check.
Instant disbursements are fast cementing their place as a favored payout method for consumers across all manner of business-to-consumer (B2C) interactions.
In an interview with Karen Webster, Ingo Money CEO Drew Edwards, taking a high-level view of instant disbursements, said, “We’ve made a lot of progress. Have we melted the iceberg where we can visibly see it? Not yet.”
But some numbers tell a tale: As Edwards said, when customers are given a range of choices in how they can get paid, less than 10 percent choose to be paid by check — which he called an evolution, considering that digital payments are a relatively new option.
The Check as Fallback
At present, Edwards said, there’s a bit of a disconnect between the way consumers would like to be paid and the way businesses are actually paying them.
As he noted, per Ingo Money’s own findings, checks remain “sticky” because they represent a “fallback for corporate America.” Less than 10 percent of consumers may be choosing the check, but about 40 percent of them are still being paid that way, Edwards pointed out.
That’s because paper becomes the default method of payment when something goes awry — such as when banking credentials can’t be authenticated, or identity cannot be verified.
“In our crazy banking system, you don’t actually have to prove who somebody is to put their name on a piece of paper and stick it in the mail,” he said.
But this fallback option (less secure though it may be) will disappear, said Edwards, as authentication methods improve on the digital front.
If past is prologue, consider the old days of card transactions, where authentication at checkout at the local grocery store may have meant getting on the phone with Amex. Fast-forward a bit across years of optimization, and now tap to pay at the terminal has become commonplace.
“We’ll get to that level of optimization on disbursements,” said Edwards, who predicted that “a year, maybe, or two years from now, we can optimize the disbursement process where less than 10 percent fail in any authentication process,” especially as passwords go by the wayside and tokenization takes root across commerce.
To get to the sea change, the seismic shift that might bring the “pay anybody” model to healthcare could simply be a matter of one large provider stepping up to the table, partnering with a disbursements or instant payout firm (such as Ingo) and setting up payment rules and processes across a secure network setting.
The tip of the spear was the gig economy, and Amazon and Uber have been instrumental in making payments part of the customer journey, said Edwards — a critical part of the experience that is ripe to make inroads into healthcare. The disbursements experience has got to be “Amazon’ed or Uber’ed — it’s got to be invisible,” Edwards said.
So far, early indications from Ingo’s bank partners and other financial services stakeholders indicate that — much as had been seen in property and casualty (PNC), and among legal firms — “the motivation is there from the consumer side and the provider side in healthcare,” he said.
There are, of course, challenges in bringing instant payments to a new vertical, said Edwards — challenges that are different than might be seen in other verticals, but not insurmountable.
As he said, the patient and provider information that is required to satisfy regulations for healthcare disbursements is increasingly being collected, stored and disseminated digitally.
When it comes time for payments, there may be a reluctance to transmit sensitive patient information (Edwards said HIPAA’s national standard that protects personal health data can be likened to PCI DSS standards) across RTPs or emails. But that part of the digital puzzle, thus far a gating factor, is likely to be solved sooner rather than later, he said.
Complexities exist in healthcare, he noted, in how payments actually get made and to whom, with split payouts to providers such as pharmacies, for example. Various points along the continuum of healthcare also may operate with different systems. Partnering with firms like Ingo Money, Edwards said, can embed payment choices in apps and across platforms.
“There’s going to be a version of tokenization or a way to make sure that you don’t just send that data out in the wild or that the payment provider doesn’t actually take control of that data,” he said.
“As long as we are in a digital environment, then [payments] look a lot like the rest of FinTech or treasury banks or the gig economy,” he told Webster. “I believe the time has arrived for healthcare RFPs in 2020.”