Insurers have plenty on their plate at the moment: the looming shadow of Brexit, rising costs, tighter margins, and growing competition in the sector, particularly from new digital disruptors. Searching for new ways to improve the bottom line in the face of these challenges can seem like a daunting task, but there are major new opportunities in the area of B2B payments.
With Virtual Account Numbers (VANs), insurers can take advantage of a new, more efficient and highly secure way to pay suppliers which reduces fraud and takes risk away from the insurer.
A new way
B2B payments are ripe for an overhaul. Many insurers have to manage a large and often complex ecosystem of suppliers, using nothing but manual processes and cheques. What’s more, they’re forced to store large volumes of vendor payment details under such systems. It’s not hard to see how this set-up benefits fraudsters and hackers whilst increasing the chances of avoidable and potentially costly administrative errors.
That’s where VANs come in. They are automatically generated, single-use, 16-digit virtual account numbers to pay suppliers, offering improved security and control over transactions. Reconciliation is also automatic and immediate, reducing overheads and manual errors.
Here are some of the other key security advantages of VANs:
- Unique account numbers are time limited, with expiry determined by the insurer
- A Merchant Category Code (MCC) means insurers can further limit payments according to type of supplier; so, if a business incorrectly receives a VAN they can’t redeem it if they fall under an alternative MCC
- Traceability/auditability can be improved by including five lines of editable data to accompany payment
- Additional protection against fraud and supplier default, thanks to Chargeback rights, meaning insurers will be reimbursed if there is a failure by the supplier to deliver the contracted service and for supplier card fraud
- No need to hold vendor payment details: this greatly reduces the risks of reputational damage and compliance fines associated with a possible data breach. Given the insurance sector experienced a 317% increase in breaches last year, this is an increasingly important consideration.
In an industry built on managing and mitigating risk, it makes sense to explore VANs as a new low-risk way to improve payment security and the bottom line.