Positive Pay: Necessary Control or Legacy Patch?

Fraud prevention has always shaped how companies move money in the United States. Unlike the UK or Europe, where payment systems consolidated around a small number of real-time clearing networks, the U.S. developed with a fragmented banking landscape. Thousands of institutions, multiple payment rails and no single settlement standard created both complexity and risk.

This fragmentation created opportunity for growth, but it also created fertile ground for fraud.

The Origins of Positive Pay

By the 1990s, cheque fraud was widespread in the U.S. Paper cheques were still the main method of corporate payment and fraudsters exploited the slow, manual system. Banks responded with Positive Pay. Corporates would send a daily file of issued cheques and the bank would match that against cheques presented for clearing. Any item that did not match was flagged for review.

Positive Pay was an effective patch for a system that was under pressure, even if it was never an elegant solution.

As ACH usage expanded, banks adapted the idea. ACH Positive Pay, also referred to as filters and blocks, gave corporates the ability to whitelist authorised originators and automatically reject any debit instructions outside that list. This was a reasonable safeguard in a system where anyone with a routing and account number could attempt to withdraw funds.

The Case For Positive Pay Today

Positive Pay remains part of many treasury operations today. The main arguments in its favour include:

• Coverage of residual cheque risk. The U.S. continues to clear billions of cheques annually, and subsidiaries or suppliers may still require them.

• Comfort for auditors and boards. Positive Pay is widely recognised as a standard fraud prevention measure, and its presence can reduce scrutiny during audit processes.

• Protection against unauthorised debits. Organisations that allow ACH debits for items such as utilities, payroll services or benefits can use filters to stop fraudulent activity before settlement.

• Bundled services. Many banks include Positive Pay alongside reporting, indemnity or cash management, making it appear to be a standard feature of treasury relationships.

• Risk aversion. Finance leaders may prefer to retain additional controls even when the actual risk appears limited.

The Case Against Positive Pay

For organisations that have transitioned to a push-only model, the rationale weakens considerably. The main challenges are:

• Redundancy. If an organisation never issues cheques and blocks all ACH debits, there is little for Positive Pay to intercept.

• Reactive processes. Positive Pay requires daily file generation and exception handling after payment instructions have already been created. This adds manual overhead that modern ERP systems are designed to remove.

• False assurance. Fraud risks in today’s environment are more likely to come from compromised credentials or social engineering than from counterfeit cheques. Positive Pay does not address these threats.

• Operational drag. Incorporating file-based reconciliation into a fileless payments strategy creates unnecessary steps and additional failure points.

Proactive Controls in Business Central

Positive Pay was designed for the problems of a cheque-heavy and fragmented system. In a fileless, API-driven environment, a more effective model is available.

• Payments are created and approved directly inside Business Central, so there are no external files vulnerable to tampering.

• Dual approvals and user entitlements enforce segregation of duties as part of daily operations.

• Audit trails are embedded within the ERP, with every instruction, approval and release captured at transaction level.

• Direct API connectivity ensures payments reach banks securely, without legacy file uploads or additional reconciliation steps.

Yavrio’s Approach

Yavrio extends this model by delivering secure ACH push payments directly inside Business Central. This removes the need for bank portals and manual uploads altogether. Fraud controls shift from being reactive to being preventative. Payment integrity is confirmed within Business Central itself rather than through a separate Positive Pay file.

For organisations concerned about audit, the position is straightforward:

We do not rely on Positive Pay because we have removed the vulnerabilities it was designed to address. Instead, we control payments at source with embedded, preventative measures inside Business Central. With tools such as Confirmation of Payee (CoP) and Verification of Payee (VoP), the risk of misdirected payments is significantly reduced, and funds are directed to the intended recipient.

Conclusion

Positive Pay retains some value for organisations that continue to issue cheques or accept ACH debits. For businesses that operate on a push-only basis, however, it functions as a legacy patch rather than a genuine safeguard. Yavrio’s fileless and embedded approach provides a stronger and more modern response. Positive Pay reacts after a transaction has been created. Yavrio eliminates the risk at its origin.