Check fraud, as well as ACH fraud continues to be one of the most common forms of payment fraud affecting businesses today. Even as companies adopt more digital payment methods, paper checks are still widely used for vendor payments, payroll, refunds, and accounts payable transactions. Unfortunately, criminals continue to target those payments through altered checks, counterfeit checks, and stolen banking information.
In order to combat these issues, banks have implemented positive pay to strengthen payment security and reduce fraud risk, and companies have integrated positive pay into their transactions for stronger security.
But what exactly is positive pay?
Positive Pay is a fraud prevention service offered by banks that helps businesses verify payments before they are processed.
When a company issues payments, they'll sends payment details to the bank in advance. As checks or ACH transactions are presented for payment, the bank compares them against the approved records provided by the business. If any information does not match, the payment is flagged for review.
Positive Pay helps businesses detect:
For organizations that process large payment volumes, positive pay adds an important layer of security between accounts payable operations and the bank.
A common question businesses ask is: how does Positive Pay work? While the process can vary slightly by financial institution, the workflow is generally straightforward and easy to understand.
First, a business issues payments through its accounting system or payment platform. The company then sends an “issue file” to the bank containing approved payment information such as check numbers, payment amounts, issue dates, or ACH transaction details.
When payments are presented for processing, the bank compares the incoming transaction against the approved records.
If the payment matches, it clears normally.
If there is a discrepancy, such as an altered amount or unauthorized payment — the transaction is flagged as an exception item. The business can then review and either approve or reject the payment.
This automated verification process significantly reduces the likelihood of fraudulent payments being processed.
Check positive pay is the most common type of Positive Pay service. With check positive pay, businesses send the bank a file containing issued check details, including check number, payment amount and issue date. As checks are deposited or cashed, the bank compares the presented check against the issue file.
If the check amount or check number are ever changed or theres attempts to cash a counterfeit check, the transaction will not match the approved record and will be flagged for review.
This helps prevent several common types of check fraud like check washing, one of the most common types of check fraud. But it's not the only technique to look out for, theres also:
For companies that still rely on paper checks, check positive pay is one of the most effective fraud prevention tools available.
Another important security tool is ACH positive pay. ACH positive pay works almost exactly like check positive pay, but instead of monitoring paper checks, it focuses on ACH transactions and electronic payments.
ACH positive pay allows businesses to control which ACH debits and credits are authorized to hit their accounts. Companies can create rules for:
If an unauthorized ACH transaction is attempted, the bank can flag or reject it before funds are withdrawn.
As ACH fraud continues to rise, ACH Positive Pay has become increasingly important for businesses managing electronic vendor payments and recurring transactions.
Payment fraud can create serious financial and operational consequences for organizations, extending far beyond direct monetary losses. It can lead to reconciliation issues, payment delays, compliance risks, vendor disputes, and even damaged customer trust. Positive Pay helps businesses strengthen payment controls by improving visibility into payment activity and reducing the risk of fraudulent transactions.
For finance teams, this means better fraud prevention, faster reconciliation, improved audit tracking, and more secure payment workflows. Organizations that process high volumes of vendor payments or checks can especially benefit from integrating Positive Pay into their accounts payable processes.
While Positive Pay is a banking service, businesses also need secure internal payment processes to fully protect against fraud.
That’s where payment automation platforms like TROY Pay can help.
TROY Pay helps businesses access positive pay, and supports positive pay through:
When paired with Positive Pay services from a bank, these workflows create a much stronger fraud prevention strategy. Businesses using secure check printing can reduce the risk of counterfeit checks with software that allows secure MICR printing to blank check stock, along with payment approvals and tracking features.
Combined with automated reconciliation and payment approvals, organizations gain greater visibility and control over the entire payment lifecycle.
Businesses can maximize the value of Positive Pay by following a few key best practices. Payment information should be transmitted to the bank as quickly as possible after payments are issued, since delays can increase fraud exposure. Organizations should also review exception items daily, as fraudulent transactions often require immediate action to avoid financial losses.
Strengthening internal approval workflows for both check and ACH payments is equally important, with multi-level approvals helping reduce unauthorized payment activity. To build a more comprehensive fraud prevention strategy, businesses should combine positive pay with secure payment automation tools and vendor verification processes.