Definition of Positive pay:
A bank service used to identify fraudulent checks and presenters. The bank matches a check against a list the issuer creates of serial numbers and amounts. The issuer is alerted to any mismatches before the bank issues funds.
In order to protect against forged, altered, and counterfeit checks, the service matches the check number, dollar amount, and account number of each check against a list provided by the company. In some cases the payee may also be included on the list. If these do not match, the bank will not clear the check. When security checks are not put in place, identity thieves and fraudsters can create counterfeit checks that may end up being honored.
Positive pay is an automated cash-management service employed to deter check fraud. Banks use positive pay to match the checks a company issues with those it presents for payment. Any check considered suspect is sent back to the issuer for examination. The system acts as a form of insurance for a company against fraud, losses, and other liabilities. There is generally a charge incurred for using it, although some banks now offer the service for free.
How to use Positive pay in a sentence?
- Positive pay is a fraud-prevention system offered by most commercial banks to companies to protect them against forged, altered, and counterfeit checks.
- The company provides a list to the bank of the check number, dollar amount, and account number of each check.
- The company then tells the bank whether or not to cash the check.
- The bank compares the list to the actual checks, flags any that do not match, and notifies the company.
Meaning of Positive pay & Positive pay Definition