Meandering Out Loud

Don Thorp’s Musing, Muttering, and Mischief Along a Random Path

Banking: The Positive Pay System

bankingI learned something new today about a system called “Positive Pay” that’s used in the banking system. It’s one of those systems that you just wouldn’t notice until something went wrong.

Earlier today, I tried depositing a check from a company only to have the the teller inform me that it couldn’t be deposited today. When I asked why, she told me it was due to the fact that it wasn’t in the system. Once I got home and looked up the number for the company, I called them, explained the situation, and they simply retransmitted the check details.

Since I helped build an ACH processing solution, I was curious about what this system entailed. Descriptions from several locations appeared using this Google search. One of the better descriptions was from SafeChecks. Here is an excerpt.

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 not pay.

The purpose of this system is to help prevent check fraud and the simplicity of it is encouraging. I can only hope that during transmittal they take the time to digitally sign the transactions.

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January 8th, 2009

Don Thorp


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