Should Insurers Be Prepared for the Obsolescence of Cash?

We have reached the stage in technology where payments through mobiles are not only possible, but increasingly common.

(Square credit card reader for mobile device. Source: Square.)

Imagine yourself going jogging in the park or to gym. Before leaving home, you made a mental note of buying milk and eggs for breakfast. If you were in year 2000, you would be carrying your mobile phone, Walkman and some cash for the purchase; year 2010, probably just your mobile phone and a piece of plastic. What about now? Should your mobile phone suffice? Why not?

We are in the age of hyper-convergence where most of our activities are centered around one device: our smartphone. You can read books, newspapers & magazines, listen to music, watch movies and play games, check weather & email, surf internet and so much more. So why not pay through your phone? It is much more convenient than carrying notes and coins or cards. Phones have become an extended part of our body which we carry with us without anyone having to remind us.

Illustration of a wireless NFC chip-based transaction. Source: Helixion.

Illustration of a wireless NFC chip-based transaction. Source: Helixion.

We have reached the stage in technology where payments through mobiles are not only possible, but increasingly common. A significant number of phones now come equipped with NFC chips which can communicate securely with payment readers placed on the retailers’ counters.

All you have to do is download an app and link it to your bank account/credit card. The app will display the payment details in an interactive manner where you can authorize the payment. Paypal president, David Marcus, calls it Money 3.0. Easy? What about doing it with a smart watch, Google Glass or something else? Easier still? Why not? Innovation is limited only by our imagination.

How can it redefine industries such as insurance? Purchasing insurance is going mobile, with agents carrying tabs and smartphones having sales apps. However the payment options for customers are cash/check or at the most integration with a payment gateway for card/net-banking payments. Seems a bit archaic in the above context, doesn’t it? There are other options in addition to NFC.

PayPal’s Beacon and Apple’s iBeacon uses proximity-based Bluetooth connections which is fairly ubiquitous across phones. So the agent can carry with him a reader along with the tablet and customer can pay using any of the above mentioned options. Sales app will process the payment, connect with the Insurer’s back-end system and generate an instant e-receipt which’ll be mailed to customer. No worries of losing the check or getting into a scam.

However in this case, the onus is on the customer for being up-to-date with technology which can be a challenging task in developing economies like India, south east Asia or Africa. Hence my personal favourite is Square or its Indian counterpart EzeTap which requires only the agent to be tech-savvy. Square is a simple gadget that plugs into the standard 3.5 mm headphone jack of your smartphone or tablet and allows you to accept card payment. It works with iOS as well as Android and can make the entire process of sales very easy and efficient.

This can easily be integrated with sales apps to provide a seamless experience for both the agent and the customer.

But not everyone has access to smart technology. According to a recent World Bank report, close to 50 percent of the world’s adults don’t even have a bank account so the title of this post maybe a little far-fetched. However the change is coming and we as technology-enablers have to be at the forefront.

Rohit Mittal // Rohit Mittal is a consultant in the insurance practice of a leading services firm. He has helped clients in the U.S., Canada and India tackle challenges related to social media & mobility solutions, business process re-engineering, new business, channel management, launching new products and legacy systems migration. Mittal holds a post-graduate degree in Management from IIFT Delhi and likes to travel & read in his free time.

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