What Is Positive Pay? A Simple Guide for Small Businesses

Check fraud is still one of the most common types of payment fraud. A thief can steal a check from the mail, change the payee or amount, and deposit it. Or they can make a fake check with your account number on it.

Positive Pay is a bank service that helps stop this. This guide explains what it is, how it works, and how to create the file your bank needs.

What is Positive Pay?

Positive Pay is a fraud protection service offered by many banks for business accounts. Here's the idea:

1. You tell your bank which checks you wrote: the check number, the date and the amount (and often the payee name).
2. When a check comes in to be paid, the bank compares it with your list.
3. If the check matches, the bank pays it.
4. If it does not match, or it is not on your list, the bank flags it as an exception and asks you what to do before paying.

In short: your bank only pays checks you told it about.

How Positive Pay works, step by step

1. You write and print checks

You write checks as usual, by hand, with accounting software, or with check printing software.

2. You send your bank a list of issued checks

This list is often called a Positive Pay file or "issue file". It is usually a CSV file (a simple spreadsheet file) that you upload in your bank's online banking. Many banks ask you to upload it every time you print checks, or every day you issue checks.

3. The bank compares every check that comes in

When someone deposits one of your checks, the bank checks the check number, the amount and other details against your file.

4. You review exceptions

If something does not match, the bank shows you an exception, often in online banking, and you choose pay or return. Banks usually give you a deadline to decide. If you do nothing, the bank uses a default choice that you agree on ahead of time.

Types of Positive Pay

Standard (check) Positive Pay

The bank matches the check number, account number and amount against your file.

Payee Positive Pay

The bank also checks the payee name. This helps catch checks where a thief changed the name on the "Pay to the order of" line.

Reverse Positive Pay

The bank sends you the list of checks presented, and you look for anything wrong. This puts more work on you.

ACH Positive Pay

A similar service for electronic withdrawals (ACH debits) instead of checks. You choose which companies are allowed to take money from your account.

Who should use Positive Pay?

Positive Pay is worth a look if:

• your business writes checks every month
• you mail checks to vendors, landlords or contractors
• several people in your business can write or print checks
• you have been hit by check fraud before

Ask your bank if they offer it, which types they have, what it costs, and which file format they accept. Fees and features vary from bank to bank.

What goes in a Positive Pay file?

Each bank has its own format, but most files include:

• account number
• check number
• issue date (the check date)
• amount
• payee name (for Payee Positive Pay)
• sometimes a code for issued or voided checks

Your bank will tell you the exact columns and order. Always ask for their file format before you start.

How to create a Positive Pay file with Check Snapper

Check Snapper can create a Positive Pay file from the checks you issued, so you don't have to type them in by hand.

1. Go to Security in the left menu (Administrators only).
2. Open Positive Pay file.
3. Pick the bank account and the check-date range.
4. Click Download CSV.
5. Upload the file to your bank's Positive Pay service.

Ask your bank which format it accepts, and compare its required columns with the file before your first upload.

Other ways Check Snapper helps prevent check fraud

Positive Pay works best together with good controls inside your business. Check Snapper includes:

• Roles: Administrator, Secretary and Office Worker, with rights to create and print checks set per person and per bank account.
• Admin PIN for sensitive actions, such as large checks, reprints and voids (you choose which).
• Spending limits per person and per bank account.
• Duplicate check protection that warns or blocks a check to the same payee for the same amount within the days you set.
• Email alerts for large checks and security changes, plus an optional daily summary.
• Reprints need a reason, and every action is saved in Activity history.
• Check numbers are assigned automatically and never handed out twice.

Learn more about business check printing with team roles and what to look for in check printing software.

Tips to lower your check fraud risk

• Use check stock with security features, like microprinting and a void pantograph. See blank check stock: what to buy.
• Upload your Positive Pay file every time you print checks.
• Review exceptions quickly, before the bank's deadline.
• Mail checks safely, for example at the post office instead of an outside mailbox.
• Reconcile your bank account often, so you spot strange checks early.

The bottom line

Positive Pay is a simple idea: you tell your bank which checks you wrote, and the bank only pays checks that match. It is one of the best tools a business has against check fraud. If you print checks with Check Snapper, you can download a Positive Pay file in a few clicks.

Start free at CheckSnapper.com.