I have been working in cash management for over 10 years. In that time various products move to the forefront of popularity. Commercial analysis accounts and overnight investments take the lead when rates are high. Online banking becomes more popular when software companies upgrade their operating systems and Remote Deposit Capture becomes the “must have” product during bad weather. (Yes – there was a silver lining to 80+ inches of snow!)
If you notice, these product sales are reactionary. Event A happens and triggers Event B. The same reactionary behavior occurs with Positive Pay. A company experiences fraud through a stolen or counterfeited check and suddenly Positive Pay becomes the product of the month.
Positive Pay was created to help prevent fraud on business checking accounts. As checks are issued, the payee name, check number, date and amount are entered in an online banking application. As those checks clear through the bank, they are matched up against the initial information entered by the customer. If there are any discrepancies between the actual check and the information entered, the check is considered as an “exception item” and the customer is notified through the online banking application. This notification allows the customer to decide whether to pay or return the potentially fraudulent item.
Over the last 3 years, with our current economic condition, I have seen an increase in episodes of fraud with my business clients as well as a spike in the implementation of Positive Pay. It is true this product requires the customer to actively manage the checks issued from and clearing their accounts, however, the benefits of Positive Pay far outweigh any perceived inconvenience.
Let’s make the implementation of Positive Pay an “action” rather than a “reaction”.