What is positive pay system: finance and technology

Positive Pay System, nowadays, advanced financial technology is both a blessing and a threat because it can make fraud so much easier. As a business owner, in today’s day and age, you have a lot of options for optimizing the payment flow across the whole company. Services like Payoneer or different other automation can make things so much easier. Nevertheless, that also calls for active protection against fraud, like the positive pay system.

 

Positive pay explained

The positive pay system helps banks discover and stop fraud.  More than a system, it is a process that analyses the cheques issued by a company. It looks at the check number, amount, and account number. The next step is to compare these checks with the ones presented for payment. If there isn’t any match or the system detects something suspicious, it will send the check back for a thorough review.

So, what is a positive pay system? It’s a security guarantee against financial liabilities and potential fraud.

What positive pay system should you use? Well, some banks offer it for free; others require a fee for that. It depends on the bank. Analyze each option you have and make an informed decision.

Why use a positive system? So, a positive system in itself is a system with always positive variables and a positive initial state. There are a lot of practical applications for these types of systems. The positive variables usually represent physical volumes and amounts, such as concentrations, sum, height, level, etc. However, that’s enough with the theory. Let’s get back to the positive pay questions and everything else you need to know.

So, is positive pay mandatory? The system is not yet mandatory, as most banks charge it as a premium feature. Nevertheless, if you want to avoid fraud, you should choose to use it and flag any fraudulent behavior before it becomes a serious threat.

What is positive pay for cheques? Well, the positive pay system is made for checking cheque payments first and foremost. As we were saying, it is a very good risk mitigation tool that works against cheque fraud.

Check fraud is quite common

So, cheque fraud is quite simple. It is one of the oldest types of financial crime out there. Unfortunately, the advent of technology payment didn’t bring the era of cheques to an end yet. Billions of payments are made by cheques every year, and there are numerous types of fraud here:

• counterfeit cheques that haven’t been written or authorized by any legitimate account holder
• forged or stolen cheques
• altered cheques where the forger has changed the name of the payee, maybe even the amount on the cheque

If these falsifications are done right, it is extremely difficult to spot them just by looking at a check. That is why you need a system. You need a process that would detect false checks at the first glance.

Of course, as additional protection measures, you could reduce the use of cheques in your organization. There are countless options for electronic payments, like Payoneer, which we’ll discuss later. You can wire or pre-authorize payments, make direct deposits, etc.

 

If you still need to use cheques, at least store them in envelopes that are not see-through. This way, you will protect the vital information written on them. Furthermore, you should keep all cheques in a safe place, to which very few people have access. If you have any unused cheques from closed accounts, just destroy them; otherwise, they can easily become a liability.

Two or more persons should be responsible for cheque issuance and reconciliation, respectively. Use a continuous set of serial numbers for re-ordering cheques. Moreover, only order one set per account.

The laser-printing process for cheques is crucial. Those responsible for the process should have multiple passwords. What is more, the printing toner should have anchorage and permanently bond to the paper.

You see, there are a lot of security measures here.

What is the difference between positive pay and reverse positive pay?

Reverse positive pay is another form of positive pay protection. In this case, the cheque issuer monitors the check on its own. So, it is the company’s responsibility to notify the bank in case there’s been a fraud attempt. As a result, the bank will decline the fraudulent cheque.

So, we’ve asked the question of What is positive pay and how does it work? But what about reverse positive pay? How does it work?

Well, first and foremost, the bank will notify your company daily and ask to account for all the cheques received. So, your company will have to approve all the cheques. Nevertheless, if you cannot respond to the bank’s request in a short period of time, the bank will simply cash the cheque. Therefore, the reverse positive pay system requires extra work from your company. It demands you to be present and confirm any cheques.

If you want to decline a cheque, you can just say that to the bank. However, this method is a lot more high-risk as there is no automated process at work here. It is old rock and roll, and that can be a lot riskier.

 

Going digital with Payoneer: review

So, we’ve seen there are several liabilities to working with cheques on a daily basis. Consequently, if your company’s profile permits it, you should consider a digital payment system like Payoneer. It offers cross-platform payment options that can benefit a wide spectrum of businesses, online sellers, and freelancers that are being paid globally or locally.

Payoneer is a single platform that makes it easy to do business all over the globe as if you were working and getting paid in your hometown. Signing up is free, and you’ll get access to a multi-currency account to use for your digital business.

Payoneer supports integrations with the world’s leading marketplaces and e-commerce platforms. You can receive payments from all over the world in your local accounts. All the major currencies are covered. You can also bill your clients fast and get good currency rates.

Payoneer also features a request payment option, where you can request to be paid directly into your account for your services. Receiving payments from other Payoneer customers is free. Once you receive the funds in your Payoneer account, you can withdraw them to any of your local bank accounts.

What is more, you can convert different currencies directly into your Payoneer account. Your global suppliers and contractors can be paid directly from your account balance. Another exciting and useful feature is the ability to pay your VAT obligations directly from the app.

If you’ve got an e-commerce business, you can store all the payments in one single location. All in all, Payoneer is a provider of financial and merchant services that allow you to send and receive payments seamlessly. Probably its main competitor is PayPal in terms of service complexity.

Overall, Payoneer offers all the features you need to grow your business.

The Payoneer fundamentals

So, on top of all the features above, Payoneer also offers prepaid debit cards and some cool tax tools. Pretty great, isn’t it? Let’s get more in-depth here.

Payoneer supports more than 150 currencies. It can be used in more than 200 countries to send money domestically or internationally. You can apply for a debit card to withdraw money, plain and simple.

As a private user, Payoneer transactions are free, in theory. Nevertheless, fees might apply. I mean, nothing is free in life, is it?

The Payoneer mobile app is pretty good, and you can use it to send money to other Payoneer peers. It is fast and simple. What is more, you can use Payoneer for Amazon affiliate programs. So, if you’re an affiliate marketer, you receive the commissions in your Payoneer account.

 

For transferring funds, you can use a prepaid MasterCard. For e-commerce and other transactions, the Payoneer debit card will do. Moreover, with this card, you can withdraw up to $2,500 per day at any ATM across the globe. Nevertheless, beware of the foreign exchange fees!

If you have any issues, you can get in touch with their dedicated customer support staff via live chat, phone, or e-mail. Payoneer has 12 office locations across 9 countries:

• US
• UK
• Israel
• Australia
• India
• China
• Gibraltar
• Hong Kong
• Ukraine

Positive pay: a little history of Payoneer

Payoneer was founded in 2005 by Yuval Tal and a bunch of other private investors. The initial seed funding was 2 million USD. In 2007, another funding of 4 million USD was injected into the company. Additional investors came in. Up to this date, Payoneer managed to raise over 260 million USD.

In 2016, the company decided to go big in the market of B2B. So they acquired the internet escrow company Armor Payments. Later that year, the company also included an automated tax form service.

In mid-2019, Payoneer increased its business offerings by allowing merchants selling on Amazon or Walmart immediate access to their working capital. Later that year, Payoneer partnered with Toptal for cross-border payments between employers and remote workers. In February this year, the company became a publicly-traded company on NASDAQ.

Payoneer’s most important solutions

So, Payoneer offers a wide range of payment solutions. We can group them into four main categories:

• Getting paid
• Funds management
• Pay
• Working capital

Now,  let’s focus on the first one. Yes, as we were saying before, you can get paid in multiple currencies and to local receiving accounts. This opens the door to more business opportunities all over the globe. These local receiving accounts are just like your local bank account. Your international clients can easily transfer money to your local Payoneer account in USD, EUR, GBP, MX, SGD, AUD, CNH, and JPY.

 

Why choose this solution? Because:

• It doesn’t require any of the international wire transfer costs
• You can work with multiple clients from multiple international marketplaces and get paid easily
• Your customers will have a simple, no-headache method of working with you

So, to enable this, you need to register on Payoneer and get a local receiving account. You can then send your customers this account’s details, and they can use them to pay you. Furthermore, you can withdraw the money to your local bank account, or you can make business payments. You can use that Payoneer balance to pay the suppliers that provide for your business.

Payoneer also makes it possible to pay the VAT fees directly from your Payoneer balance. What is more, you can convert your funds to whatever different currencies you prefer. You can do that directly from your balance. It sounds nice.

Requesting a payment with Payoneer

Payoneer offers the option of billing your global clients with no costs. You can easily request a payment from a client. Just add his account details, and it will be like you’re billing him for your services. It is a very straightforward and transparent approach. What is more, Payoneer allows you to track incoming payment until it arrives in your account. How do you do that?

You register for a Payoneer account. You navigate to “Receive” and select “Request a payment”. Then you enter the amount, your client’s details, and the due date. Next, your client will be notified and can pay you directly. It all happens with just a few clicks.

Payoneer marketplace and networks

If you’re a freelancer working on any known freelancer platform, then you can get paid via Payoneer. If you’re a photographer or visual artist uploading photos to stock photography marketplaces, you can easily get paid via Payoneer.

Payoneer features integrations with hundreds of different marketplaces all over the world. You also have a “Store Manager” solution to keep track of all the payments received via these marketplaces. What is more, you can use the funds for any purpose. If you need to withdraw locally, you can do that. If you want to make a business payment, you can go ahead. You can even pay the VAT fees from your Payoneer balance.

You just register on Payoneer. Then you fill in your payment details from your chosen marketplace. So, in this way, you’ll receive all the payments to your Payoneer account.

Payoneer’s marketplace partners are:

• Airbnb
• Fiverr
• Amazon
• eBay
• Newegg
• Google
• real.de
• Lazada
• etc.

So, to avoid any positive pay systems and the tedious process of issuing cheques and checking for any fraud, why not get your business digital? It’s true; there are other threats in the digital finance world, as well.

Nevertheless, there are also solutions, and you win in comfort and safety overall.