Cashless, seamless and efficient. These were the features life insurer AIA had in mind last year when it decided to automate its premium payment collections for its Hong Kong business.

Leveraging the Hong Kong Monetary Authority’s (HKMA) Faster Payments System (FPS) introduced in September 2018, AIA became the first insurer in the city to allow premium payments via a QR code scan allowing for real-time settlement of payments.

“The FPS-based solution modernizes AIA Hong Kong’s collections process for both new business premium and renewal premium collections,” shares Grace Li, CFO of AIA Hong Kong. “It reduces paper-based payments, digitizes collections and results in a convenient and customer-oriented payment experience.”

According to Li, the cash management solution streamlines the operational process by allowing primary insurance policy details to be embedded in a QR code. This results in improved data accuracy, bringing about a single platform and real-time acknowledgement.

The scheme works by allowing AIA policyholders to pay for premiums via the FPS function on their respective mobile banking apps either by scanning a QR code embedded on a personally sent invoice or through AIA’s interactive point of sales system via an iPad used by agents for collections.

The solution has also been noticeable for its simplistic payment process. “Nowadays if you are using credit cards for e-commerce purchases, you will most likely have to input your card details to make a payment, which could result in security concerns for some customers,” says Yvonne Yiu, head of global liquidity and cash management, Hong Kong at HSBC, who worked closely with AIA on the FPS-based solution.

Yiu also explains that the FPS solution, otherwise known as FPS Business Collect service, will continue to evolve for the insurer with a focus now on embedding the QR code within AIA Hong Kong’s mobile app for instance. “It is our goal to modernize AIA Hong Kong’s collections and disbursements to eliminate the paper-based payments process and move towards more digitized forms of collections and payments,” says Li.

Since it was put in place last year, HSBC’s FPS Business Collection solution has been deployed to almost 300 clients with the bank already securing 650 mandates. Aside from AIA, other entities including Hong Kong Electronic have adopted FPS as an alternative collection channel.

“Different insurance companies are thinking about utilizing this option, particularly for policy premium collections. For insurance companies, it could improve the customer experience, collection speed and simplify the reconciliation process,” notes Yiu.

Hong Kong isn’t alone when it comes to adopting a cashless commercial payments channel. Other markets such as Thailand and Singapore, for instance, have generated much interest from the commercial sector for such a solution.

For example, in March 2019, Singaporean airline Scoot announced that it would be accepting payments via PayNow Corporate (an interbank funds transfer service supported by The Association of Banks in Singapore), making it easier for customers to execute payments while at the same time improving the reconsolidation process of the airline.

“You shouldn’t deploy a digital payment solution just for the sake of having one additional payment option,” advises Yiu. “You need to think of it in terms of how you can leverage technology to transform your engagement with customers.”