Positive Pay Service
Positive Pay is a service to prevent fraudulent items from being paid against a customer's account. It works in conjunction with a full reconcilement service by looking at the account daily to verify that in-clearing items match the items issued by the customer.
How it Works
The Positive Pay service at First American Bank begins with a customer's “issue” file. As checks are issued by a customer - whether daily, weekly, or monthly - an “issue” file must also be electronically delivered to the bank. This file is maintained and warehoused on the bank's system. The bank maintains a database to which we add each additional "issue" file during the month. The customer's check-writing schedule will dictate this process and its frequency.
Next comes the bank's daily reconciliation or Positive Pay service. On a daily basis, the bank matches in-clearing checks that must be paid against the customer's account to the customer's issue file database. If an item matches, the bank pays the check. If an item does not match any of the issues, the item becomes a Positive Pay Exception. A customer is notified of positive pay exceptions via phone call by 11:00 am each day. The customer must then make a decision to pay the item (perhaps it was a manually issued check that was not included on the electronic issues file sent to the bank) or to return it. The customer must notify the bank of this decision by 1:00 pm or the items will be returned unpaid.
Items remain on the Issues file until the item is cleared through this process or until the customer updates their Issues file to remove voids or stop payments.