An in-depth exploration
An efficient method of detecting alterations on corporate checks is positive pay. Positive pay is a bank service that proves to be one of the most effective anti-fraud tools available today for check disbursements. It allows the financial institution and its customer to work together to detect check fraud by identifying items presented for payment that the customer did not issue. The financial institution verifies checks received for payment against the list provided by the customer and pays only those on the list.
Any item presented for payment that does not match a corresponding item in a customer-issued file is flagged as an exception and the check is held for authorization from the customer that issued the check. Among the items detected by this process are forged checks having duplicate serial numbers, voided checks presented for payment, checks with altered or invalid amounts, stale checks, and checks with altered payee lines.
Positive pay services eliminate the need to review each check, helping companies gain control of the exceptions process and significantly reducing write-offs. Until recently, positive pay systems relied heavily on manual labor in reading the data from a check image and thus were very expensive to implement and manage.
Automating the identification of suspect items significantly reduces personnel costs related to research and reconciliation. It also raises the efficiency of the whole process. However, these systems did not traditionally recognize the payee name, which is a classical alteration on checks.
It's essential for efficient check processing
It has its limitations
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Automated payee match positive pay is an enhancement to the traditional image-based positive pay application. Image analysis and pattern recognition technology offer an automated solution for reading both machine-printed and handwritten payee data from the check. This provides an extra layer of protection by comparing payee information from checks to the payee information provided in the customer-issued file, which was not accomplished or accomplished manually in the backroom operation of the financial institution.
The payee match positive pay application may be initiated immediately after the completion of the financial institution’s In Clearing and Proof of Deposit check processing operation and traditional image positive pay process and allows financial institutions to further increase data validation on business checks and reduce check fraud.
Positive pay services eliminate the need to review each check, helping companies gain control of the exceptions process and significantly reduce write-offs.
