The offering is a first of its kind in the Canadian insurance market and speaks to Mastercard’s larger strategy of digitalizing payments that are traditionally not digital, like check payments, Zahir Khoja, senior vice president, Global Acceptance & Solutions, Mastercard, told Bank Innovation.
With the FairFax Financial partnership, Mastercard will be digitalizing its check payments related to fund collections and disbursements.
At the heart of this product is Mastercard’s electronic payment service, Mastercard Send. Through Toronto-based Dream Payments Hub, the insurance company can collect and send payments to their customers using Mastercard Send. With Mastercard Send, the user can receive the funds through a direct deposit in their debit account or in the form of a prepaid card, “almost instantly after the claim gets approved by the insurer,” Khoja said.
“There is an obvious value to the customer because they can receive the funds quickly and seamlessly,” he said.
For the insurance company, there is a huge cost savings advantage.
“The insurance company will save a lot of money by getting rid of paper checks,” he said.
Khoja was unable to say how much the insurance company winds up saving, but said given that “the Canadian insurance industry pays around CAD$30 billion in claims per year, you can imagine it being a significant amount,” he said.
“It also helps cut costs related to their call centers, since it eliminates calls from customers inquiring about their checks,” he said.
The product, which is live in Canada as of today, is being rolled out first to Northbridge Insurance, which is fully owned by Fairfax.
“Gradually, we will roll out the product to other insurance companies and other international market,” Khoja said.