Positive Pay is an automated fraud detection tool offered by the Treasury 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.
Positive Pay requires the company to send (transmit) a file of issued checks to the bank each day checks are written. When those issued checks are presented for payment at the bank, they are compared electronically against the list of transmitted checks. The check-issue file sent to the bank contains the check number, account number, issue date, and dollar amount. Sometimes the payee name is included, but is not part of the matching service.
When a check is presented that does not have a "match" in the file, it becomes an "exception item". The customer will make the determination to pay or return the check.
The customer is given access to view account via online banking and will have access to report of paid checks and the exception report which list checks presented to bank for payment that do not match by check number and amount or checks paid that were not in the issuance file received by the bank. The customer will make the final determination on the status (pay or return) of the check.