What is positive pay system for cheques, how does it work

Positive pay system A positive pay system is a measure by the RBI to prevent frauds perpetrated through cheque payments in the form of tampering or alteration of the cheque. The drawer of the cheque reconfirms key details of the cheque which can then be cross-checked at the time of presentation of the cheque while processing the payment. If the cheque details provided through positive pay match with the details of the cheque presented, the payment is processed, else, the cheque is returned

Limit
Positive pay ensures safety of funds and hence it is desirable to use the facility for payments using cheques. Some banks have made it mandatory for cheques with the value of Rs.50,000 and above to go through verification via a positive pay system. Some banks have kept the facility optional


Positive pay details
For the positive pay, the drawer or issuer of a cheque needs to submit customer’s account number, cheque number, cheque date, amount and the beneficiary name.

Process
The above details need to be submitted by the account holder through the registered email id or by visiting the branch or through internet banking/mobile banking. For seamless payment to the beneficiary, these details should ideally be submitted a day before the presentation of the cheque by the payee. Once the details are received by the bank, these are cross-checked and verified with the presented cheque instrument and then, the payment is processed.

Point to note
Details filled for positive pay should be in English.
It is a good idea to use alternate third-party payment methods such as RTGS or NEFT to carry out high-value fund transfers.

Content on this page is courtesy Centre for Investment Education and Learning (CIEL).
Contributions by Girija Gadre, Arti Bhargava and Labdhi Mehta.