What is Positive Pay?

Definition

Positive Pay is a cash management and fraud prevention service offered by banks to help organizations detect and prevent check fraud. It works by matching the check numbers, amounts, and payees on issued checks against the bank’s records before payment is processed.

Key Features

• Fraud Detection: Identifies discrepancies to reduce the risk of unauthorized or altered checks, minimizing exposure to financial losses.

• Transaction Verification: Ensures that only checks issued by the organization are honored by the bank.

• False Positive Monitoring: Monitors False Positive Rate and False Positive Rate (Fraud) to improve accuracy in fraud detection and reduce operational inefficiencies.

• Audit Trail: Provides detailed records for reconciliation and supports compliance and internal control requirements.

• Integration with Treasury Operations: Often used alongside automated payment systems to streamline cash management and reduce manual verification efforts.

Summary

Positive Pay is a bank-provided fraud prevention tool that validates issued checks against a company’s records. By monitoring discrepancies and false positive rates, it enhances security, supports reconciliation, and strengthens overall cash management controls.