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Understanding Positive Pay

Posted on July 25th, 2016 by Sanjit Anand ||Email This Post Email This Post

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Positive Pay can best be described as a fraud prevention program or tool.

Technology has increasingly facilitated the ability of criminals to create counterfeit checks and false identification that can be used to engage in fraudulent check activities. As a result, companies must adopt practices to protect against check fraud.

Positive pay can provide this protection for companies by enabling them to create a file of check information that their banking institutions can use when determining whether to issue payment for checks.

Positive Pay technology allows banks to reconcile company issued checks with bank items presented for payment, and flag the exceptions.

No altered, copied, or counterfeited checks are cashed. This clearly helps banks cut down on check fraud losses.

Following are the advantages of Positive Pay:

  • Avoid losses due to check fraud.
  • Facilitate the check reconciliation process.
  • Enhance overall cash management program.
  • Augment risk management measures

When you use positive pay, you create a file for your bank that includes information for each check that you printed during the day, such as check number, date, amount, and account number.

The bank compares the information on the checks that they receive with the information in this file, and if the information for any of the checks does not match the file, the system does not pay the checks.

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 big companies , 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.

Positive Pay Today

Many bank customers are not really 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 [ adopted Internet ] annually, the federal government has ruled that bank customers must also be responsible for check fraud losses.

Therefore , 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.

Do you still have these Business Problem

  1. POR – Pay on Receipt
  2. Global Payment Compliance
  3. Periodic Recurring Payments
  4. Check Printing
  5. Prevention of Check Fraud

In that case , Positive Pay Implementation may be an options to automate . Next Post , we will take deep dive on Positive Pay Implementation Process…Untill Then .:)

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