Positive Pay Stops Fraud

Commercial customers of First Union's Global Cash Management Division have a powerful fraud prevention tool protecting their company checks. First Union began testing a system in July that allows tellers to reject checks at the teller window based on a positive pay system.

The basic positive pay system works this way: a company submits to the bank a file listing all checks issued. The bank has the capability to match the serial numbers and amounts of checks presented for payment against the file the company provides. Checks that don't match are then reported back to the company. Usually, the company then would tell the bank whether to accept or reject those that don't match.

First Union's system takes it one step further by providing pay or no-pay instructions systematically to tellers. When a teller scans a check, the system automatically alerts the teller whether to refuse payment if the check does not match company information.

Copyright © 1999 Bankers' Hotline. Originally appeared in Bankers' Hotline, Vol. 9, No. 11, 11/99