4 ways virtual payments will enhance automotive warranty payment programs

If you work in automotive warranty insurance or the fast-growing roadside assistance industry, you know the importance of quick help. For those who handle payments, fast and accepted payments are crucial for your company’s reputation. You need to pay repair centers, car dealers, tow truck owners, and other vehicle maintenance companies quickly and efficiently. 

Fortunately, on-demand digital payments such as virtual cards simplify payments for warranty insurance and roadside assistance companies. This helps policyholders get back on the road faster and pays repair shops securely. Virtual payments can also benefit your bottom line. Read on to learn how virtual payments can help warranty payments in four ways.   

What are virtual payments?

Instead of calling in a credit card number tied to a physical credit card (which increases risk for potential fraud), a virtual payment is a digital representation of a credit card that’s issued on demand for a one-time use in the exact amount of the service being provided. Once the payment is taken, for the exact amount it was issued for, the card is deactivated and cannot be used again. Want to learn more about virtual cards? Click the image below to view the full-sized infographic!

How popular are automotive warranty programs? 

They’re very popular in the United States and are expected to generate more revenue. The U.S. auto extended warranty market was valued at $18 billion in 2020. It’s expected to increase by 33% to more than $24 billion by 2030. 

How popular is roadside assistance? 

The global roadside assistance industry is expected to grow significantly between now and 2023. According to one report, the industry generated $28.9 billion in 2022. It’s expected to reach $47.6 billion just 10 years later. 

Briefly, how do payments work in the auto warranty or roadside assistance process?

Let’s say a warranty policyholder experiences car issues while driving and needs to take their car into the shop. The policyholder then files a claim. After approval, the repair shop needs to be paid by the manufacturer or warranty company.

Any delay in payment could be costly – in terms of time and money – for everyone involved. As the warranty company, you could send a check or physical payment card to the repair shop. You could also set up an ACH transfer. But there are real perks with choosing to pay via virtual card instead. 

The same goes for roadside assistance. In this case, roadside assistance providers might need to pay to cover a tow truck company that towed the policyholder’s vehicle. 

4 benefits to using virtual payments for warranty payments

• They’re fast. Virtual payments allow for fast delivery. They are backed by automated processes so recipients aren’t waiting for a check or physical card to arrive. 
• They’re more secure. Virtual cards come with a variety of one-off controllables for the warranty insurance provider or roadside assistance company, including amount and date. That helps to reduce fraud. 
• They’re easier to track. Virtual payments help to keep the payment process electronic. This allows you to more easily automate record-keeping when it comes time to review claims or conduct audits. 
• They actually generate revenue. Depending on who you work with for business payment solutions, you may be able to take advantage of rebate programs. With WEX, the more you spend using virtual cards, the more you make in rebates. This turns what was previously a cost center to you, into a revenue opportunity. 

For more insights and updates on corporate payments, check out:

• Your guide to virtual card rebates
• Current trends in finance
• Accounts payables: Terms you need to know

Learn more about how WEX payment solutions can be tailored to your business, so you can accelerate and streamline operations while creating lasting growth and success for your organization.

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The information in this blog post is for educational purposes only. It is not legal or tax advice. For legal or tax advice, you should consult your own legal counsel, tax, and investment advisers.

Editorial note: This article was originally published on January 18, 2024, and has been updated for this publication.

Sources:
Globe Newswire
Allied Market Research