Understanding ACH Positive Pay
By Linda Pelc | Assistant Vice President/Treasury Services | Norfolk Main Branch
A Key to Secure Business Transactions
ACH Positive Pay is a powerful tool Midwest Bank offers to protect business finances. The fraud prevention service ensures the authenticity of Automated Clearing House (ACH) transactions. Learn more about ACH Positive Pay and why businesses should incorporate it into their Treasury Management package.
What is ACH Positive Pay?
ACH Positive Pay is a security feature Midwest Bank offers to protect businesses against unauthorized ACH transactions. It works similarly to traditional Positive Pay but is specifically designed for electronic payments. Here’s how it operates:
- Pre-Authorization of Transactions: Businesses provide their bank with a list of approved ACH transactions detailing the amount, date, and payee information.
- Verification Process: When an ACH transaction is presented to the bank, it is cross-referenced against the pre-approved list.
- Exception Handling: A transaction that does not match the provided list is flagged as an exception. The business is then notified and must approve or reject the transaction.
This process helps ensure that only legitimate transactions are processed, significantly reducing the risk of fraud.
The Importance of ACH Positive Pay for Businesses
Enhanced Security: Securing financial transactions is crucial with the rise in cybercrime. Positive Pay adds an extra layer of security, protecting businesses from unauthorized debits and potentially significant financial losses.
Fraud Prevention: Fraudulent transactions can go unnoticed until significant damage is done. Positive Pay helps detect and prevent such activities by verifying each transaction against a pre-approved list.
Operational Efficiency: While manual verification of transactions can be time-consuming, ACH Positive Pay automates the process, saving businesses time and resources. This automation allows finance teams to focus on more strategic activities rather than routine checks.
“Even a single fraudulent item not caught in a timely fashion can cost a business thousands of dollars. Having Positive Pay protection is like carrying insurance, in that you do not hope to use it, but it is extremely valuable once an issue arises.”
Improved Cash Flow Management: By ensuring only authorized transactions are processed, businesses maintain better control over their cash flow. This control is vital for budgeting, forecasting, and overall financial planning.
Customer Trust and Confidence: Implementing security measures like Positive Pay demonstrates a business’s commitment to protecting its financial integrity. This commitment can enhance trust and confidence among customers and partners, fostering stronger business relationships.
Implementing ACH Positive Pay
Adopting Positive Pay involves a few steps:
Meet with Treasury Management: Discuss the available Positive Pay services with Midwest Bank. We will ensure you understand the features, costs, and integration process.
Set Up Authorized Transactions: Compile a list of approved transactions, including recurring payments and one-time payments.
Monitor Exceptions: Regularly review exception reports provided by your bank and promptly address any unauthorized transactions.
Continuous Review: Periodically update the list of authorized transactions to reflect changes in your business operations.