Positive Pay can protect your business from payment fraud by allowing you to review unauthorized checks and ACH transactions. Learn more about how the service works.

Fraud is one of the biggest risks facing your business today. Whether completed via check or Automatic Clearing House (ACH), fraudulent transactions can be devastating for your company.

To avoid losing money to scammers, it’s essential to have tools in place that help you combat these types of schemes. For the maximum protection, fraud prevention services should be integrated into your payables management.

Partnering with a commercial bank that offers Positive Pay is a great way to prevent payment fraud from occurring at your company. Below, we explain two major forms of payment fraud—check fraud and ACH fraud—and how Positive Pay can protect against each.

What is payment fraud?

Payment fraud refers to any illegitimate or illegal transactions completed by cybercriminals. This might take the form of a phishing email in which a fraudster tries to get employees to provide sensitive financial information. Alternatively, fraudsters might entice employees to download malicious software which exposes company data.

If cybercriminals have access to your bank information, they can commit check fraud by creating and cashing a counterfeit check that looks like it belongs to your company. Or, employees could commit check fraud by stealing company checks and making payments out to themselves.

ACH fraud is similar to check fraud, but the fraudulent transaction is completed through the ACH Network. If scammers can access your bank account number and routing number, they can attempt to initiate an ACH payment to their account. 

How common is check fraud and ACH fraud?

According to the Association for Financial Professionals (AFP), over 65% of organizations in their 2023 Payments Fraud and Control Survey report being targets of attempted or successful payment fraud. 63% of organizations surveyed reported check fraud, while 43% of organizations reported ACH fraud.

While check fraud is still the most common type of payment fraud, AFP reports that ACH credit fraud has increased in recent years. According to the Federal Trade Commission, the most common type of reported fraud in 2022 was imposter scams. In these types of scams, the transaction is often completed via ACH.

Positive Pay and fraud prevention

Positive Pay is an automated cash management service used by many financial institutions, including Cadence Bank. It works by matching presented checks with a record of checks that have been issued from your account. There is a related service called ACH Positive Pay which allows you to review incoming ACH debits.

Positive Pay can be a key tool in combating cybercrime. Below, we explain how Positive Pay fraud prevention works.

Check fraud protection

Positive Pay can be used to effectively prevent check fraud. Here’s how it works:

1. You send your bank a digital file of each check issued throughout the day.
2. Your bank matches checks presented for payment against your file of issued checks.
3. Any checks that do not match will be flagged and reported to you.
4. You review the flagged checks on an online portal and decide whether or not to follow through with payment.

This service adds an extra layer of security to your check processing. Positive Pay’s sophisticated automation software reads payee names from check images and compares this to your file of issued checks. By manually reviewing checks that do not match your records, you can catch check fraud before any fraudulent checks are processed.

In addition, Positive Pay ensures that checks presented over the counter at any Cadence Bank branch are declined if they do not match your issue file.

>>Related Reading: How to Reduce Fraud with Lockbox Banking

ACH fraud protection

ACH Positive Pay helps you combat electronic payment fraud. Here’s how the process works:

1. You set up a list of approved vendors. For each vendor on your list, you can set an expiration date and payment cap.
2. If an electronic payment is requested outside of your parameters, you will receive an alert.
3. You review each flagged payment and decide whether to approve or deny the transaction.

This service is an effective way to avoid ACH fraud. Even if scammers manage to gain access to your bank account information, you’ll be able to notice fraudulent transactions before they are completed.

In addition to the process outlined above, Cadence Bank’s ACH Positive Pay service allows you to separate roles amongst different employees. For example, you have one employee in charge of maintaining the approved vendor list and another employee who makes the decision to approve or deny payments. This separation of roles provides greater internal control over ACH fraud.

Cadence Bank also offers an ACH Block feature, which allows you to temporarily block all incoming ACH debits if you have reason to believe that your information has been compromised.

Safeguard your transactions with Cadence Bank

Positive Pay and ACH Positive Pay are invaluable tools when it comes to preventing check fraud and ACH fraud. Instead of responding to attacks after they occur, set up safeguards to stop payment fraud in its tracks.

Cadence Bank offers a wide range of treasury management solutions designed to help minimize the risk of fraud for companies of all sizes. If you would like to learn more about how Positive Pay and ACH Positive Pay can protect your organization, reach out to a Treasury Management Officer.

This article is provided as a free service to you and is for general informational purposes only. Cadence Bank makes no representations or warranties as to the accuracy, completeness or timeliness of the content in the article. The article is not intended to provide legal, accounting or tax advice and should not be relied upon for such purposes.