when the information doesn t match the check the bank notifies the customer through an exception report withholding payment until the company advises the bank to either accept or reject the check the bank can also flag the check notify a representative at the company and seek permission to clear the check 
companies should thoroughly review the terms and conditions of their financial institution as banks may not be responsible for fraudulent checks if the company finds only a slight error or other minor problem it can also choose to advise the bank to clear the check if the company forgets to send a list to the bank all checks presented that should have been included may be rejected which could cause some financial problems here s a step by step breakdown of the process positive pay vs reverse positive paya variation on the concept of positive pay is the reverse positive pay system this system requires the issuer to monitor the checks it writes on its own in the reverse positive pay system it s the company s responsibility to alert the bank to decline a certain check as such the bank provides the company with daily notifications about all presented checks and clears only those that are approved by the company if the company does not respond within a fairly short time the bank will typically go ahead and cash the check s in question this method is not as reliable and effective as positive pay but it is cheaper preventing frauddigital wallets and other new forms of financial technology are changing the way people bank which means fewer checks are being written but check fraud still exists in fact the threat from check fraud hovered around 66 in 2020 banks reported losses of about 1 500 per item 1 so it should come as no surprise that financial fraudsters are still finding ways to scam others out of their money using checks services like the positive pay system can help prevent fraud companies can ensure that every check that goes through their account is properly vetted because they are matched against a list provided to the bank not only is this a step against fraud prevention but it also ensures efficiency the bank can cash or reject checks without any delays any items that are deemed suspicious are held aside for further review as exception items this means that the proper control is in place even when there are questionable documents that are presented to be cashed nothing goes through without the proper verification the total percent of business to business transactions that were initiated through checks 1positive pay fees and costthe fees associated with positive pay depend on where you bank your relationship with the financial institution the type of customer you are high net worth retail small business or large corporation and in some cases the value of your company s net worth some banks offer the service for free while others may charge their clients on a per use basis in these cases banks charge a flat fee for every item they may have to verify still there are other banks that offer it for a monthly service charge these banks may offer a limit to the number of transactions they ll verify or they may provide unlimited positive pay services there may be other fees that come with the service on top of the costs of adding the service to your account these can include if you re interested in the service ask your bank or financial professional about how much it costs to enroll and whether there are any additional fees advantages and disadvantages of positive payjust like any additional financial service positive pay comes with both benefits and drawbacks it s always a good idea to do your research weigh the pros and cons and ensure it makes the most sense for you fraud control and preventionmay also cover ach transactionsavoid hassle of closing opening accountsincreased control and decreased losstime consumingrisk of missed deadlinescostenrolling in and adding positive pay can provide individuals and companies with an additional layer of protection for their bank accounts while many banks often try to do their due diligence when it comes to preventing fraud there may be instances where bad checks fall through the cracks services like this can help cut back if not prevent check fraud positive pay can provide protection against fraud associated with traditional paper checks and with automated clearing house ach debit transactions banks may offer these services separately or in a plan that covers both another benefit is that it eliminates the need to close affected accounts and open new ones this can be cumbersome and lead to unnecessary paperwork clients can assume control of their finances and accounts by enrolling in positive pay this alleviates a third party namely the bank from taking control and clearing checks that you or your business never wrote this decreases the chance of losses while it does allow you as a client to take control of your financial affairs there is an obvious negative that is you ll need more time to devote to positive pay first you are required to take the time to make a list to provide to the bank you must also be available to verify any exception items that the bank may present to you most banks give their clients a certain amount of time to respond to queries about exceptions and other questionable items if you fail to respond on time the bank may either cash or reject the check this may obviously be a problem especially if you wanted it to take the opposite action another disadvantage is the cost like insurance if you enroll in positive pay you may be paying for something that you never end up needing or you may pay for it and find that it saves you large amounts of money and time spent dealing with fraud whether it s a worthwhile cost will depend on your bank your business and your finances 