What is Positive Pay?
The Positive Pay Tutorial
Positive Pay can best be described as a fraud prevention program or tool. Positive Pay consists of an electronic file (usually ASCII text) that contains check information for issued checks. The file is provided to the bank (usually transmitted electronically). The file is then stored in the bank's system.
When a check is received by the bank, the bank compares the data on the check to the issued check information provided by the client. If the check information contains any discrepancies compared to the issue file, the check is set aside as an exception for the client to review for accuracy.
A company is protected from check fraud because criminals cannot cash fraudulent checks just by using a stolen account number or blank check. This also prevents the payee from altering the check amount or other pieces of information.
3-Step Positive Pay Process
Why is Positive Pay so Important?
Positive Pay implementation is the principal action in the development of a corporate check fraud strategy. Originally created by large corporations, Positive Pay has proven itself as an effective weapon in the war against check fraud. Until recently, due to the custom computer programming and data transmission requirements, Positive Pay had been very expensive and difficult to implement, reserved only for very large corporations. The complexity of Positive Pay implementation had been further compounded by a lack of industry standardization that resulted in each bank individually developing their own unique file transmission specifications and requirements.
Positive Pay has become the most effective tool for fighting check fraud. And the recent enchancement of Payee Positive Pay has made it nearly impossible for a check to be fraudulently produced or modified successfully.
Is it Necessary to Use Positive Pay Software?
No. You can produce a Positive Pay file on your own, or even get your accounting application provider to set up a custom report (for as much as $5,000). But here are a couple of reasons why using a Positive Pay software would be in your company's best interest:
- Data Conversion
Banks require that the Positive Pay report (file) be in a specific format. With hundreds of accounting applications in use by bank customers, the bank would not be able to accommodate all of those different export formats. Postive Pay software acts as the go-between, converting the wide array of export formats into the single format required by the bank. - Internal Security
It has already been demonstrated that Positive Pay can eliminate nearly all external check fraud. But Positive Pay software allows your company to prevent internal fraud as well. With several security levels, a company can distribute tasks and enable supervisor review so that a person would need access to much more than just the accounting application or the check printer to be successful. Some software packages even come with secure transmission capabilities that eliminate the last opportunity to commit internal check fraud.
Positive Pay Today
Many bank customers are not concerned about check fraud because they are still under the impression that the bank must absorb all of the check fraud losses. But with check fraud expected to exceed $50 billion annually, the federal government has ruled that bank customers must also be responsible for check fraud losses. So now, not only do banks want their customers to be using Positive Pay, the bank customers are also motivated to prevent fraud. Banks expect that the number of customers using Positive Pay will multiply many times over in the next few years.
Learn More
SecurePay Positive Pay Software
If you have questions, please contact us at 1-800-652-2877.
Back to the top of the page
