_{ACH vs. Instant Pay vs. Paper Checks: Which Claims Payment Method Is Right for Your Operation?}

_{If you manage claims payments at a carrier, MGA, or TPA, you have heard the pitch for going digital. But "digital" is not one thing. The three most common ways to pay a claim today are paper checks, ACH transfers, and instant payments (also called real-time payments or RTP). Each one comes with real tradeoffs in cost, speed, security, and policyholder experience. This post breaks down all three so you can make an informed decision about which methods belong in your operation, and in what combination.}

_{Paper Checks: The Default That Is Costing You More Than You Think}

_{Paper checks remain the most common claims payment method in the insurance industry, particularly for property and casualty lines. But that prevalence comes at a price. Bank of America has estimated that processing a single paper check costs a business between $4 and $20 when you account for printing, postage, manual reconciliation, escheatment handling, and fraud exposure.}

_Speed

_{A paper check takes 3 to 7 business days to reach a policyholder by mail. Once received, the policyholder must deposit it, then wait another 1 to 3 business days for the funds to clear. Total time from claim approval to available funds: 5 to 10 business days at best.}

_Cost

_{$4 to $20 per check in total processing costs. For a carrier processing 5,000 claims per year, that is $20,000 to $100,000 annually in check-related expenses alone.}

_Security

_{Paper checks are the most fraud-prone payment method in the industry. The American Bankers Association found that check fraud accounted for 47% of industry fraud losses. Checks can be intercepted, forged, altered, or washed.}

_{Policyholder experience}

_{Poor. Policyholders are waiting days for a check to arrive, then making a trip to their bank or waiting for a mobile deposit to clear. In an era where people can send money to a friend in seconds, mailing a paper check feels like a relic.}

_{Best for}

_{Policyholders who do not have a bank account or who specifically request a physical check. Some older policyholders prefer checks, and having paper check fallback ensures you do not exclude anyone.}

_{ACH: The Workhorse of Digital Payments}

_{ACH (Automated Clearing House) transfers move money electronically between bank accounts through the ACH network managed by Nacha. They are the backbone of payroll, bill pay, and increasingly, insurance claims disbursements.}

_Speed

_{Standard ACH takes 1 to 3 business days to settle. Same-day ACH is available for an additional fee and settles within the same business day, though not on weekends or holidays.}

_Cost

_{ACH is dramatically cheaper than paper checks. Processing fees typically range from $0.20 to$1.50 per transaction, making it the most cost-effective digital payment rail available. Same-day ACH adds roughly $1.00 to $1.50 per transaction.}

_Security

_{ACH payments are encrypted, processed through a federally regulated network, and far less susceptible to fraud than paper checks. However, ACH debits (where you pull money from an account) do carry a risk of returns due to insufficient funds or disputed transactions. ACH credits (where you push money to a policyholder) are lower risk since your organization initiates and controls the transfer.}

_{Policyholder experience}

_{Good. The policyholder receives funds directly in their bank account without needing to deposit anything. The main limitation is timing. A policyholder who files a claim on Friday afternoon may not see funds until Tuesday or Wednesday of the following week.}

_{Best for}

_{The majority of standard claims disbursements. ACH should be your default payment rail for most claims because of its low cost, reliability, and broad acceptance. Nearly every policyholder with a bank account can receive ACH.}

_{Instant Pay: The Speed Leader}

_{Instant payments, also known as real-time payments (RTP), settle in seconds rather than days. In the U.S., the two primary networks are The Clearing House's RTP network (launched 2017) and the Federal Reserve's Fed Now Service (launched 2023). Both operate 24/7/365, including weekends and holidays.}

_Speed

_{Seconds. Funds are available to the policyholder immediately upon settlement. The RTP network now processes over 1 million payments per day, with 42% of transactions occurring overnight, on weekends, or on holidays, which shows the demand for always-on payment capability.}

_Cost

_{Higher than ACH but still far cheaper than paper checks. RTP uses flat per-transaction pricing. Exact costs vary by your bank and payment platform but typically range from $0.50 to $2.50 per transaction. For claims that require urgency (natural disasters, emergency auto repairs, medical emergencies), the speed premium is worth it.}

_Security

_{Instant payments are credit-push only, meaning the sender initiates the transfer. This eliminatesthe risk of unauthorized debits or returns due to insufficient funds. Once sent, the payment is final and irrevocable. Transactions are encrypted and processed through the ISO 20022messaging standard, which supports rich remittance data for easier reconciliation.}

_{Policyholder experience}

_{Excellent. This is the gold standard for policyholder satisfaction. A claim is approved, and the money is in their account within seconds. According to Citi's research on instant payments in insurance, settling a claim in seconds rather than days minimizes frustration and improves trust, differentiating insurers that offer instant payments from those that do not.}

_{Best for}

_{Emergency and catastrophe claims, time-sensitive disbursements, high-value policyholders, and any situation where payment speed directly impacts the policyholder's ability to recover. Also increasingly expected by younger policyholders who are accustomed to real-time financialtransactions.}

_{The Right Answer Is Not One Method. It Is All Three.}

_{The carriers getting claims payments right are not choosing one rail and forcing every claim through it. They are giving their claims teams the ability to match the payment method to the situation. A standard homeowner's claim for roof damage? ACH. A policyholder displaced by a hurricane who needs funds immediately to book a hotel? Instant pay. An elderly policyholder who specifically requests a check? Paper check, mailed directly from the platform. The key is having a single platform that supports all three methods, connects directly to your bank accounts, and lets your adjusters choose the right payment rail for each claim without switching between systems or vendors.}

_{What This Means for Your Operation}

_{If your current claims payment process only supports paper checks, you are overpaying one very single claim and delivering a policyholder experience that is driving down satisfaction scores. If your digital payment vendor only supports ACH, you are missing the ability to pay urgent claims in real time. And if your vendor requires you to deposit funds into their custodial account before disbursing, you are losing interest yield on your reserves regardless of which payment method you use. The ideal setup is a platform that supports ACH, instant pay, and paper checks from a single dashboard, disburses from your own bank accounts, and gives your claims team the flexibility to choose the right method for every situation.}

_{ClaimsSnap by SnapRefund supports ACH, instant payments, and paper checks from a single platform. Your adjusters choose the right payment method for each claim. Funds disburse directly from your bank accounts, not a custodial account.}