A payee positive pay agreement is a banking service that helps prevent fraudulent transactions. It is an agreement between a bank and its customer that allows the customer to submit a list of authorized payees to the bank. When a transaction is initiated, the bank will compare it to the list of authorized payees. If the payee is not on the list, the bank will reject the transaction.
The payee positive pay agreement helps protect businesses from check fraud. Fraudsters often create fake checks and attempt to cash them at a bank. With a payee positive pay agreement in place, the bank will compare the payee on the check to the authorized payee list and reject the transaction if the payee is not authorized.
In order to set up a payee positive pay agreement, the customer must provide the bank with a list of authorized payees. This list can be updated as needed. The bank will charge a fee for this service, which is typically a flat rate per transaction or a monthly fee.
There are several benefits to using a payee positive pay agreement. First and foremost, it helps prevent fraud and unauthorized transactions. This can save businesses a lot of money and also protect their reputation. Additionally, it can help streamline the payment process and reduce the risk of error.
It is important for businesses to carefully review their bank`s payee positive pay agreement before signing up for the service. The agreement should include details about the fees and the bank`s responsibilities in preventing fraudulent transactions. It is also important to regularly review and update the authorized payee list to ensure that it is accurate and up-to-date.
In conclusion, a payee positive pay agreement is a valuable banking service that helps prevent fraudulent transactions and protect businesses from financial loss. It is important for businesses to carefully review their bank`s agreement before signing up for the service and to regularly review and update their authorized payee list.