Positive Pay: An Underused Tool for Fighting Check Fraud The PaymentsJournal Podcast

Even though the number of checks written continues to decline, mail theft remains on the rise. Beyond the theft of checks directly from mailboxes, there have been instances of stolen mail trucks. The ease of modifying checks allows criminals to simply wash and modify the payee’s name. 







Q2’s positive pay system, used by roughly 550 banks across the country, is on track to stop more than $2.5 billion in fraud this year. In a recent PaymentsJournal podcast, Bruce Dragoo, Manager, Solutions Consultant for Q2, and John Byl, SVP Product Development at Mercantile Bank of Michigan—a Q2 customer—discussed how to get people on board to combat check fraud with Albert Bodine, Director, Commercial and Enterprise Payments for Javelin Strategy & Research.





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A Problem for Businesses of All Sizes







In 2022, around $720 million of fraud was identified and stopped by Q2’s positive pay system. Last year, that number doubled to $1.4 billion.













“It seems like it’s wider-reaching at this point and coming downstream to smaller businesses,” Byl said. “It had been historically viewed as a large corporate need, but it’s indiscriminate at this point—and it’s affecting everybody.”







A third of commercial payments globally are still made by check, which presents a huge opportunity for criminals. But only 30% of eligible businesses use positive pay, which matches the details on a check to the details on file with the bank to ensure its validity. Some related solutions cover just checks, and others cover ACH transactions, but they don’t address the gamut of everything a business may need.







“In some cases, having a great technology provider that can provide not only check but ACH positive pay, along with full reconcilement capabilities, can be a barrier to some of these institutions signing up for a full breadth of what they need,” Dragoo said. “It’s about being either reactive or proactive in regards to the financial institution selling positive pay. At some financial institutions what I’ll hear is that the only time that they sell positive pay to a customer is when they’ve had check fraud on their account and they’re reacting to the situation.”







Talking to customers before they open a checking account can be critical. If they are a small business or a corporate client,