What is Payee Positivie Pay?
Payee Positive Pay is a fraud prevention service banks offer to help businesses protect themselves from check fraud. It is an enhancement to the traditional Positive Pay system, which aims to prevent unauthorized checks from being cashed or deposited by comparing the details of checks presented for payment against a list of checks issued by the account holder.
Payee Positive Pay Features:
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Check Issuance: When a business issues check to its vendors or other payees, it sends a file to the bank containing details of each check, such as the check number, payee name, and the check amount.
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Payee Verification: When a check is presented for payment at the bank, the bank's system will verify the check details against the information provided by the business in the check issuance file. The critical aspect of Payee Positive Pay is that it focuses not only on the check number and amount but also on the payee's name.
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Exception Handling: If the check details match exactly with the information in the issuance file, the check is cleared for payment without any issues. However, if there is a discrepancy, such as a mismatched payee name, the check is flagged as an "exception."
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Notification and Decision: When an exception occurs, the bank informs the business of the discrepancy. The account holder can then review the exception item and decide whether to approve or reject the payment. If the payee's name is correct, the business can accept the payment, preventing fraudulent checks from being cashed.
