Check fraud may seem like a problem of the past, but it remains a real threat to businesses today. And while many banks offer basic alerts for suspicious activity, they don’t always catch issues before damage is done. Enter Positive Pay, a fraud prevention tool helping stop fraudulent checks before they’re ever cashed. At Legacy Bank, we’re proud to offer Positive Pay to our business customers to provide you with more control over what leaves your account. Find out what Positive Pay is, how it works, and why it could be transformative for your business.

What Is Check Positive Pay?

Check Positive Pay is an automated fraud prevention service offered by banks to help businesses protect themselves from check fraud. By verifying checks before they clear, Positive Pay helps identify potentially fraudulent or altered checks early, reducing the risk of unauthorized transactions. When issuing checks, your bank’s system automatically compares each check against the company’s check register list, and any discrepancies are flagged for review before being sent to your business for verification. Through real-time monitoring and alerts, Check Positive Pay helps ensure unauthorized checks never leave your account undetected! 

How It Works

When your business signs up for Positive Pay, you’ll send your bank a daily list of all the checks you’ve issued via your Business Online Banking Portal (this is known as a check-issue file). This file will include disbursement details like the check number, dollar amount, and date. As checks are presented for payment, your bank’s Positive Pay system automatically compares each check against this check-issue file. 

If the details match, the check is cleared and paid. If there’s a discrepancy, such as an incorrect amount or check number, the check is flagged and sent to your business for review. Payment will be withheld until your company approves or rejects the transaction. In short, this is what you can expect:

1. The issuing company submits a daily check-issue file to the bank.
2. Positive Pay matches each presented check against the list.
3. Checks that match are cleared and paid; exceptions are sent to the business for verification.

ACH Positive Pay vs. Positive Pay

While traditional Positive Pay focuses on detecting fraudulent checks, ACH Positive Pay is designed to catch unauthorized electronic (ACH) transactions. Instead of matching checks to a list, ACH Positive Pay uses customizable filters to screen incoming payments. Your business can set rules to automatically allow transactions from trusted vendors, while blocking others for review.

Benefits for Businesses

How does your business benefit from Positive Pay? Positive Pay provides an additional layer of protection to help your business safeguard against check fraud. While many banks offer real-time alerts for suspicious activity, Positive Pay goes a step further by helping stop fraudulent checks before they’re ever cashed. And unlike traditional fraud detection systems that rely on the bank’s judgment, Positive Pay puts control directly in your hands, allowing you to decide whether to approve or reject flagged checks. Some key benefits include:

• Fraud Prevention—Catch suspicious or altered checks before they clear.
• Account Control—Choose which flagged items to approve or decline.
• Reduced Risk of Error—Minimize manual mistakes with automated matching.
• Ongoing Monitoring—Stay informed of potential issues with real-time alerts.