4 ways virtual payments will enhance automotive warranty payment programs

Whether you’re an automotive warranty insurance provider or part of the fast-growing roadside assistance industry, you and your colleagues value the ability to spring into action for your customers when something goes wrong for those in need of warranty repairs or roadside assistance. For those of you who support executing payments for the services provided on behalf of your customer, you know how critical it is to your company’s reputation to provide fast, widely adopted payments to repair centers, car dealers, tow truck owners, and other vehicle maintenance companies. 

Fortunately, on-demand digital payments (such as virtual cards) have simplified the ability of warranty insurance providers and roadside assistance companies to make payments —with monetary benefits back to your bottom line — by streamlining the payment process to get policyholders back on the road and repair shops compensated in a fast, secure way. Keep reading to learn more about virtual payments and to learn four ways warranty payments benefit when going virtual. 

What are virtual payments? 

Rather than 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 and is 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 and is 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. After the policyholder files a claim and is approved, 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, or you could 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 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, which 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, turning what was a cost center into a revenue opportunity for you. 

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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 advisors.