Positive Pay

What Is Positive Pay?

Positive pay is an automated cash-the executives service utilized by financial institutions employed to hinder check fraud. Banks utilize positive pay to match the checks a company issues with those it presents for payment. Any check considered suspect is sent back to the issuer for examination. The system acts as a form of insurance for a company against fraud, losses, and different liabilities to the bank. There is generally a charge incurred for utilizing it, albeit a few banks currently offer the service for a decreased fee or free.

Figuring out Positive Pay

To safeguard against manufactured, altered, and fake checks, the service matches the check number, dollar amount, and account number of each check introduced against a rundown given by the company. At times, the payee may likewise be remembered for the rundown of the checks. If these don't match, the bank won't clear the check. At the point when security checks are not put in place, identity thieves and fraudsters can make fake checks that might turn out to be respected.

At the point when the information doesn't match the check, the bank tells the customer through an exception report, withholding payment until the company encourages the bank to acknowledge or dismiss the check. The bank can flag the check, inform a representative at the company, and look for permission to clear the check.

What's more, in the event that the company finds just a slight blunder or other minor problem, it can decide to encourage the bank to clear the check. On the off chance that the company neglects to send a rundown to the bank, all checks introduced that ought to have been incorporated might be dismissed, which could create a few financial issues.

As banks may not be responsible for fraudulent checks, companies ought to survey the organization's terms and conditions completely.

Reverse Positive Pay versus Positive Pay

A variation on the positive-pay concept is the reverse positive-pay system. This system requires the issuer to monitor its checks all alone, making it the company's responsibility to alert the bank to decline a check. The bank informs the company everyday pretty much totally introduced checks and goes through the checks approved by the company.

Commonly, in the event that the company doesn't answer inside a genuinely short time, the bank will feel free to cash the check. This method hence isn't generally so dependable and effective as positive pay, however it is less expensive.

Features

• Identity criminals and fraudsters frequently try to make and cash fake checks, and those checks could be cashed.
• Companies typically give a rundown to the bank of the check number, dollar amount, and account number of each check.
• The company then, at that point, lets the bank know the choice about whether to cash the check and the banking authorities will do what the company solicitations of them.
• Positive pay is a fraud-counteraction system offered by most commercial banks to companies to safeguard them against produced, altered, and fake checks.
• The bank compares the rundown to the real checks, flags any that don't match, and advises the company.