For any business or industry, the ability to stay relevant is key to success. Staying with the old ‘tried-and-true’ ways, without the capacity, willingness, or foresight to adapt to technological advances, can be a company’s death knell.
As Bill Donnell, President and CEO of National Council on Compensation Insurance (NCCI), points out, Blockbuster lost its way when it did not adapt to the changing market and eventually went bankrupt while Netflix succeeded. For payment administrators in the workers’ comp industry, the same may be true with payment methods.
For as long as most people can remember, when an injured worker received a workers’ comp payment, it was usually delivered by check. It’s a simple process, but it’s also costly and prone to fraud. Checks can also be a major inconvenience for remote workers, especially if they’re unbanked or underbanked.
When the cost of check writing is totaled up, including overhead and administrative fees, in addition to the paper, ink, and postage costs, checks can cost up to $8.00 per payment. That’s very costly, especially for payment administrators who write hundreds or thousands of checks. When a check is lost or stolen, it costs even more to re-issue the payment, not only in actual dollars, but also in time spent.
Checks are also vulnerable to fraud. The 2017 AFP Payments Fraud and Control Survey says that “checks have been and continue to be the payment method most often exposed to fraud activity.” Fifty-five percent of participants in the AFP survey reported experiencing check fraud in 2016. With the financial loss associated with check fraud, the cost of check writing becomes even more expensive.
Then there’s the issue of convenience, especially for mobile workers. Being away from home is very stressful, and even more so when a worker is injured on the job. Working at a remote location means that some workers are far from their home banks, and they may not have a stable address. Moreover, some workers may not use a bank because they do not have enough funds to keep an account open. When the workers’ comp payment comes by check, the injured worker has to use a check cashing service to get their money. It’s costly and extremely inconvenient, not to mention the fact that they may not have the mobility to go to the bank, depending on the severity of the injury.
A Modern Solution for Payment Administrators
For payment administrators who want to stay with the times, save costs, and deliver timely, affordable payments, there is a solution. A bank-neutral, reloadable debit card is the answer.
More and more, people are using a card payment system instead of cash or checks in the United States. A survey by ConsumerCredit.com reported that 80 percent of respondents used a debit card for everyday purchases such as gas, meals, and groceries, as compared to 14 percent using cash.
Consider, too, that the Treasury Department stopped mailing checks to Social Security recipients in 2013. And since 2003, among non-cash transactions, check usage dropped to 15 percent while debit and credit card usage rose to a combined 49 percent. Market forces are leaning ever more toward card payments, while cash and check continue to decline.
Reasons to Consider a Card-Based Payment Solution
With a reloadable debit card, payment administrators don’t have to worry about expensive check writing costs. In addition, they can set up an automated schedule that delivers payments on time. That results in more satisfied workers and fewer upset calls to the customer service department.
As for security, once injured workers receive their cards, they register through a secure online portal and set up a PIN. There is no sensitive banking information required or printed on the check, increasing payment security. Theft and lost payments also decrease with fewer checks being sent through the mail.
Once the card is registered, they can then use it everywhere most major credit cards are accepted; this enables them to take care of necessities like buying groceries and paying their bills. They can even use it at an ATM if they need to withdraw cash. There’s no need for check cashing services or worrying about a missing payment.
Keeping up with the times can be difficult, especially when the tried-and-true methods have been around for so long. However, partnering with the right card payment solution provider can ease the transition and help keep payment administrators up-to-date. Staying relevant will help administrators keep their business and forego becoming a relic in challenging and competitive market.