In 2020, the Payment Association of SA (PASA) highlighted a depressing new phenomenon: a rise in the number of unpaid debit orders – a desperate attempt by consumers to manage their cashflows, with many having suffered a blow to their finances under lockdown restrictions.
It should come as no surprise that ongoing loadshedding, inflation and rising fuel and food costs have compounded the long-tail economic side-effects of the pandemic, with disastrous repercussions for consumers that will continue to impact their payment commitments.
And who has been hardest hit by this cocktail of chaos? The emerging market, explains Prin Munsamy, Solutions Actuary at Metropolitan GetUp. This increasingly pressurised dynamic has led to the financial services provider unveiling a highly innovative, flexible payment solution that will initially be added to its Funeral Plan and later rolled out across its full suite of products aimed at the emerging market.
Munsamy expands: “Premium collection is currently the most challenging part of an insurance product’s design process, specifically those solutions that target the emerging market.
“This market is vast and consists of several sub-segments, all exhibiting different payment behaviours. As our economy contracts, unemployment remains rife, and many in this sector continue to survive (and thrive!) through entrepreneurship, with younger consumers exploring side hustles and gigging opportunities to supplement their incomes.” According to a 2020 McKinsey report on the future of payments in South Africa, up to 45% of income earned in South Africa is still received in cash.
He says that this has given rise to a growing proportion of the income and expenditure within these segments happening outside of traditional payment and transaction channels and timelines, adding that these trends are also visible in the declining efficiency of traditional stop and debit order collection mechanisms across the broader insurance sector.
“Income volatility makes collection on a specific day of the month difficult for our market. In addition, our clients prefer being in control of how and when they spend their money.
“To meet these challenges and requirements, Metropolitan GetUp has embarked on a new payment platform that is designed to supplement traditional collection mechanisms with a distinctly non-traditional approach to how clients pay.”
Through four “Any’s”, this platform aims to create flexibility and put control back into the hands of Metropolitan GetUp’s clients:
1) Any method – consumers can select their payment method from an extended list of options that includes cash (via retailers and spaza shops), digital payment platforms (such as Zapper and Snapscan), Instant EFT or digital payments facilitated by credit/debit card as well as debit or stop order – and can update this preference as often as they choose to do so.
2) Any time – payment can be made at any time of the month, and premiums can be settled in several instalments, whenever the consumer has access to funds.
3) Any person – payments can be made via several contributors, tapping into community-centric payment behaviours.
4) Any amount – clients can pay whatever amount they can afford during the course of the month, even if it is not the whole premium owing. Cover will be adjusted accordingly each month. Clients with a good payment history will benefit from a sophisticated and unique model that fluctuates their cover in line with the actual payments made.
“Clients will have increased payment flexibility, allowing them to manage their cashflow more easily and maintain their cover while Metropolitan GetUp is better assured of premium collection. It’s a win-win,” says Munsamy.
Clever, clear and consistent communication is a critical part of this offering, which will include a smart chatbot that can seamlessly manage client preferences, complementing Metropolitan GetUp’s other channels of client engagement.
“We believe that empowering our clients to manage the funding of their policies via an agile, dynamic and innovative solution will improve our client value proposition, preventing them from losing their cover as a result of product rigidity, adds Munsamy.
“As the landscape continues to evolve, we expect that increased product flexibility will become the norm and innovation the order of the day, as insurers creatively respond to consumers’ shifting needs.”
