Positive Pay and ACH Positive Pay: Safeguarding Businesses from Fraud

In today’s digital era, businesses face increasing threats from fraudulent activities, particularly in the realm of financial transactions. Two critical tools that have emerged to combat these threats are Positive Pay and ACH Positive Pay. These systems provide robust protection against check and electronic payment fraud, respectively. Understanding how they work, and their benefits, is essential for any organization aiming to secure its financial operations.

What is Positive Pay?

Positive Pay is a cash management service offered by First National Bank of Michigan to help businesses detect and prevent check fraud. The process involves the business uploading their outstanding check issue file. This includes details such as check numbers, dates, payee, and amounts. When checks are presented for payment, the fraud system cross-references them with the issued list. Only checks that match the provided details are cleared for payment; discrepancies trigger an alert for the business to review and decide whether to approve or reject the payment.

Key Features of Positive Pay

1. Automation and Accuracy: By automating the verification process, Positive Pay significantly reduces human error and enhances the accuracy of check processing.
2. Fraud Detection: Any mismatch between the presented check and the issued check list immediately flags potential fraud, allowing the business to take prompt action.
3. Notification System: Businesses receive notifications of any discrepancies, providing an opportunity to intercept fraudulent checks before they are processed.

What is ACH Positive Pay?

ACH Positive Pay extends the principles of Positive Pay to electronic payments made through the Automated Clearing House (ACH) network. With the rise in electronic transactions, ACH Positive Pay has become a vital tool in preventing unauthorized ACH debits from a business’s bank account.

Key Features of ACH Positive Pay

1. When an ACH is attempting to debit the business account, the customer will return them or approve the debit. If the ACH is approved, it can be added to the approved list.
2. Enhanced Control: Businesses can set filters and rules, specifying which entities are authorized to debit their accounts and setting transaction limits.
3. Notification System: Similar to Positive Pay, ACH Positive Pay sends notifications for any unauthorized or suspicious debit transactions not on the approved list, allowing businesses to take immediate action.

Benefits of Positive Pay and ACH Positive Pay

1. Fraud Mitigation: Both services are designed to detect and prevent unauthorized transactions, significantly reducing the risk of financial losses due to fraud.
2. Operational Efficiency: Automating the verification process streamlines financial operations, saving time and resources that would otherwise be spent on manual reconciliation and fraud detection.
3. Increased Confidence: Knowing that robust security measures are in place provides peace of mind for businesses and their stakeholders, fostering trust and confidence in the company’s financial management practices.

Conclusion

Positive Pay and ACH Positive Pay are indispensable tools in the modern financial landscape, providing essential safeguards against check and electronic payment fraud. By automating transaction verification and enabling notifications, these services empower businesses to protect their financial assets effectively. As fraud tactics continue to evolve, investing in these advanced fraud prevention mechanisms is a proactive step that can save businesses significant time, money, and reputational damage in the long run.

To learn more or set up Positive Pay and/or ACH Positive Pay for your business, please email our Treasury Management specialists at treasurymanagement@fnbmichigan.bank.

Posted in Security Updates