The prevalence of check fraud is rising among businesses. According to the Association of Financial Professionals' recent report, payment fraud schemes victimized 71% of companies. Of those impacted, 66% experienced ACH and check fraud. However, Positive Pay can help your business fight against fraudsters and prevent financial loss.
Positive Pay is an automated cash management system that helps eliminate the risk of losing money from fraudulent checks. We use this system to coordinate financial payment security efforts with your business; this allows your business to monitor payments and ensure that only your payee receives the approved funds. If we receive a check that doesn't match your Positive Pay file, we will contact you to verify payment details before honoring it.
Positive Pay adds an extra layer of security for your business; it helps catch fraudulent payments before checks are processed, reducing the likelihood of financial loss from payment fraud.
Cash Management Department
Banks offer exclusive services to help businesses grow and manage their cash flows. Positive Pay is one service your business should use to combat financial loss associated with payment fraud. However, with check fraud risk, companies need extra protection from fraudsters.
Positive Pay is an important cash management tool for businesses because it offers protection against payment fraud. Positive Pay protects the business client's cash flow by not honoring checks that don't meet security measures, thereby preventing fraudsters from accessing unauthorized funds. This system also helps reduce the risk of human error when manually entering check information.
When Positive Pay is in place, businesses can focus on their growth and day-to-day operations without worrying about losing money to fraudulent payments.
How Positive Pay Prevents Fraud
Positive Pay protects against forged, altered, and counterfeit checks by comparing checks received against a list of authorized payments that business clients provide. Three main check attributes must match before we clear the payment.
- Check number
- Dollar amount
- Account number
Sometimes, businesses will also include payee names. When your business provides payee names in the Positive Pay file, these names also must match before we process the check.
The Positive Pay Process
Businesses using Positive Pay provide a list of pre-authorized checks to our bank, which is required for Positive Pay verification. This list tells us which payments your business approves, the amount of each payment, the check numbers, and the account numbers. In addition, as mentioned above, this list might include a list of payee names.
You must always send this list for payment processing since we will use this information to validate which payments to honor and which might be suspicious. If your company forgets to send this list, we might reject payment for some or all of the checks received.
Once we have your Positive Pay file, we will compare the information on the file with the payments received. If any information doesn't match, we will withhold payment and notify your company representative through an exception report for your business to review.
Exception Reports
An exception report lists all checks presented for payment in which the check attributes don't match the Positive Pay file.
Sometimes information doesn't match due to a minor error or problem; in this case, your business might advise us to proceed with clearing the check for payment. However, your business always makes the final decision on clearing suspicious checks, so it's essential to review this report when you receive it that same day.
Once your business reviews the exception report, your company representative should advise us whether to pay or decline the check. We will follow whatever instructions you provide for each payment on the exception report.
Reverse Positive Pay
An alternative to the automated Positive Pay system is reverse Positive Pay. The reverse Positive Pay process is similar to Positive Pay, except your company takes responsibility for monitoring its checks and alerting us when to decline any payment.
Reverse Positive Pay services don't cost as much as standard Positive Pay. Still, they're also not as reliable because if we don't receive an alert to decline payment in time, we will automatically cash the check.
Positive Pay Highlights
- Dramatically reduces check fraud
- Prevents payment of duplicate checks
- Protects against lost or stolen checks
- Simplifies the check-cashing process
- Saves on labor costs
- Reduces human error from manual check entry
- Your business always has the final decision on payments
Conclusion
Security measures like Positive Pay are necessary to prevent fraudsters from unauthorized access to funds. By validating checks before they clear, your business can prevent financial loss from payment fraud. Positive Pay adds another layer of security to help your business guard against financial losses from fraudulent checks. Visit our website to get started with Positive Pay.
Sources
- https://www.asmag.com/showpost/33017.aspx
- https://www.synovus.com/business/resource-center/protecting-your-business/the-true-price-of-fraud/
- https://www.businesswire.com/news/home/20190102005011/en/Juniper-Research-Retailers-to-Lose-130bn-Globally-in-Card-not-Present-Fraud-Over-the-Next-5-Years
- https://www.securitymagazine.com/articles/97179-59-billion-lost-due-to-fraud-in-2021
- https://www.investopedia.com/terms/p/positive-pay.asp
- https://tipalti.com/what-is-positive-pay/
- https://www.afponline.org/publications-data-tools/reports/survey-research-economic-data/Details/payments-fraud
- https://consumer.ftc.gov/articles/how-spot-avoid-report-fake-check-scams
- https://sqnbankingsystems.com/blog/types-of-check-fraud/
- https://www.extracobanks.com/media/698/download
- https://www.extracobanks.com/business/treasury-management/fraud-protection
