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. Leading Indicator

    A measurable economic factor that changes before the economy starts to follow a particular pattern or trend. Leading indicators ...
  2. Wage-Price Spiral

    A macroeconomic theory to explain the cause-and-effect relationship between rising wages and rising prices, or inflation. ...
  3. Accelerated Depreciation

    Any method of depreciation used for accounting or income tax purposes that allows greater deductions in the earlier years ...
  4. Call Risk

    The risk, faced by a holder of a callable bond, that a bond issuer will take advantage of the callable bond feature and redeem ...
  5. Parity Price

    When the price of an asset is directly linked to another price. Examples of parity price are: 1. Convertibles - the price ...
  6. Earnings Multiplier

    An adjustment made to a company's P/E ratio that takes into account current interest rates. The earnings multiplier is used ...
Trading Center