Positive Pay - Definition, Examples, Pros, and Cons
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Marketing demands and savvy innovation are driving the development of the worldwide accounting services market, and more associations are currently perceiving the capability of bookkeeping programming in the business. Because bookkeeping is not easy!
Bookkeeping is something other than monitoring credits and charges and doing the math on records. Accounting, inspecting, finance, charge planning — every one of these is just important for what makes the whole bookkeeping.
Throughout the long term, accounting has developed into a more powerful field, and the utilization of complex information and new accounting methods ceaselessly drives the development of accounting services. We can see these by the stats below!
By 2022, the market for accounting services will be worth $868 billion, growing at a CAGR of 9.1%. (2022) The Business Research Company
Booking and accounting services are provided by 79% of accounting companies. (2021 Capital Counselor)
Prodded by the developing propensity of little to enormous organizations and the extension of counseling business firms, the accounting industry has continuously witnessed a huge development for many years and will continue to do so.
In light of these figures, it is crucial for all organizations to establish preventative steps to secure payments, including training staff members about current payment fraud practices and putting in place the tools and procedures required to protect corporate assets and data from cybercrime.
One such service that aids in the prevention of payment fraud is Positive Pay.
According to AFP President and CEO Jim Kaitz, "Payments fraud is a persistent problem that is only growing worse despite repeated warnings and educational efforts." Treasury and finance professionals must become knowledgeable about the most recent frauds and teach both themselves and, perhaps more significantly, their coworkers how to avoid them.
So let’s find out more about Positive pay and how it helps organizations prevent fraud!
What is positive pay?
Online banking is becoming more practical for both individuals and companies because of technological advancements. Much of that was made possible by the Check 21 Act, which was passed in 2003. It enabled banks to process more checks, including digital image checks, more quickly than ever before. Although convenient, this exposes businesses and people to the risk of fraud. A method known as "positive pay" is one of the techniques utilized to stop such fraud.
Positive pay is an automated fraud elimination service provided by banks to business customers to prevent check fraud.
A company provides a list of issued checks to their bank on a daily basis, and the bank compares that list against checks presented for payment when clearing at Federal Reserve Banks (FRBs) or other banks.
If there is any discrepancy between the lists, such as unauthorized amounts or check numbers, the item will not be paid and will be returned unpaid to the customer's depository institution. This helps prevent fraud because it ensures that only authorized employees have access to checks.
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