Overview of Positive Pay
What is Positive Pay?
Positive Pay is an automated fraud
detection tool offered by the Cash Management Department of
most banks. In its simplest form, it is a service that
matches the account number, check number and dollar amount
of each check presented for payment against a list of
checks previously authorized and issued by the company. All
three components of the check must match exactly or it will
How does Positive Pay work?
Positive Pay requires the company to
send (transmit) a file of issued checks to the bank each
day checks are written. When those issued checks are
presented for payment at the bank, they are compared
electronically against the list of transmitted checks. The
check-issue file sent to the bank contains the check
number, account number, issue date, and dollar amount.
Sometimes the payee name is included, but is not part of
the matching service.
When a check is presented that does not
have a "match" in the file, it becomes an "exception item".
The bank sends a fax or an image of the exception item to
the client. The client reviews the image and instructs the
bank to pay or return the check.
There is generally a fee charged by the
bank for Positive Pay, although some banks now offer the
service for free. The fee might well be considered an
"insurance premium" to help avoid check fraud losses and