PaymentsJournal.com took a look at the world of corporate payments and listed nine things corporate treasurers can expect in 2020. This includes:
- a categorical rise of real-time banking (No. 1)
- explosive new records for the volume of payments managed by corporate treasurers (No. 3)
- a warning that fear of fraud and security breaches will increase (No. 4)
According to a a recent (and broad) survey of treasurers conducted by the consultancy Strategic Treasurer:
60 percent of treasurers acknowledged their payments security concerns are higher than in previous years. With nefarious techniques including account takeovers and spearphishing attacks growing in effectiveness, treasurers responsible for addressing vulnerabilities and safeguarding payments systems will only become more vigilant and eager for long-term ways to stay out for-the-wrong-reason headlines.
We’ve reported on increased check fraud — in spite of fewer checks written – in previous blog posts. The Wall Street Journal reports that some feel “the recent rise in check fraud could motivate corporate treasurers to ditch paper checks and replace them with faster, safer and cheaper electronic payments.” The article also noted, however, that businesses cling to checks; according a survey of treasury and finance professionals by the Association for Finance Professionals in September, checks are still the most popular payment method for transactions between U.S. businesses.
Fortunately, the industry is responding proactively, as explained in a Springfield Business journal opinion column by Dee King, corporate services development officer at Guaranty Bank. Ms. King touts the Positive Pay fraud prevention system as strong armor against check fraud.
Positive Pay is an underutilized fraud prevention system, an easy solution to help protect a business from check fraud. It’s offered by most banks and helps protect businesses from having their checks forged.
Here’s how it works: a company provides their bank with a list of legitimate checks. If a check is presented that doesn’t match the dollar amount and check number, it’s flagged as an exception. The participating business is provided a daily report of exceptions to their list. They can review checks on the exception list and choose to pay or return the checks, protecting themselves from potential fraud.
The Association of Certified Fraud Examiners estimates the typical organization loses 5% of revenues per year because of fraud. Businesses can help protect themselves by investing a small amount of time and money in systems like Positive Pay. Even with electronic payments gaining in popularity as a predominant payment method, paper checks are still used extensively and will be for the foreseeable future.
Positive Pay systems are not new, revolutionary fraud solutions but are essential tools for check fraud detection. When evaluating a positive pay system, banks and financial institutions should assess the capabilities of the solution while identifying what use cases the solution can detect. Deploying a positive pay system that not only detects alterations to the dollar amount and check numbers, but also has the ability to read the payee field to detect alternations while matching the payee to the payee issue file source, will effectively eliminate use cases like the “check theft.”
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