Positive Pay

AAA

DEFINITION of 'Positive Pay'

A cash-management service employed to deter check fraud. Banks use positive pay to match the checks a company issues with those it presents for payment. Any check considered to be potentially fraudulent is sent back to the issuer for examination.

INVESTOPEDIA EXPLAINS 'Positive Pay'

Although it is effective at catching bad checks, the positive-pay system costs more than other systems. For example, the reverse positive-pay system requires check issuers to self-monitor; the issuer must then alert the bank when it declines a check. This method, while cheaper than positive pay, is not as reliable.

RELATED TERMS
  1. Check

    A written, dated and signed instrument that contains an unconditional ...
  2. Overdraft

    An extension of credit from a lending institution when an account ...
  3. Debit Card

    An electronic card issued by a bank which allows bank clients ...
  4. Bank Draft

    A type of check where the payment is guaranteed to be available ...
  5. Bad Check

    A check drawn on a nonexistent account or on an account with ...
  6. Financial Action Task Force (FATF)

    An intergovernmental organization that designs and promotes policies ...
Related Articles
  1. Tired Of Banks? Try A Credit Union
    Retirement

    Tired Of Banks? Try A Credit Union

  2. 9 Tips For Safeguarding Your Accounts
    Options & Futures

    9 Tips For Safeguarding Your Accounts

  3. Choose To Beat The Bank
    Options & Futures

    Choose To Beat The Bank

  4. When Good People Write Bad Checks
    Budgeting

    When Good People Write Bad Checks

Hot Definitions
  1. Halloween Strategy

    An investment technique in which an investor sells stocks before May 1 and refrains from reinvesting in the stock market ...
  2. Halloween Massacre

    Canada's decision to tax all income trusts domiciled in Canada. In October 2006, Canada's minister of finance, Jim Flaherty, ...
  3. Zombies

    Companies that continue to operate even though they are insolvent or near bankruptcy. Zombies often become casualties to ...
  4. Witching Hour

    The last hour of stock trading between 3pm (when the bond market closes) and 4pm EST. Witching hour is typically controlled ...
  5. October Effect

    The theory that stocks tend to decline during the month of October. The October effect is considered mainly to be a psychological ...
  6. Repurchase Agreement - Repo

    A form of short-term borrowing for dealers in government securities.
Trading Center