Positive Pay is an industry wide technique used by banks to prevent check fraud.
The check security process is implemented in a straightforward manner. A company that cuts checks collects all the relative information about the checks: the account number, the check numbers, the check amounts, the payee, and most importantly the amounts issued. Once collected, the information is transmitted electronically to the bank. The bank then uses the actual check information to compare against the incoming checks. Should the bank detect a discrepancy between the reported check amount and the actual check amount, the check will then not be honored. Moreover, a fraudulent check is stopped.
Not only does this process help to efficiently prevent check fraud, but also it places the burden of responsibility on the banks themselves.
Though somewhat new, banking institutions that had originally offered this level of security as an option, are now making it required. With this in mind, it can only be assumed that the technique will gain greater acceptance by security conscious companies.
How does iSeries Postive Pay, a module of iChecks implement this check fraud technique?
Since iChecks already processes the spool files used to generate the checks, the same process can be enabled to capture the check information. No change to the existing financial software package is necessary.