Exploring Positive Pay

Check fraud is skyrocketing, and financial institutions are scrambling to keep up. In this episode of Wrestling Payments, host Joseph Casali sits down with Sean Carter, President & CEO of NPG, to unpack why fraudsters are winning—and how banks and businesses can fight back. Carter explains the alarming rise in fraudulent checks, the organized crime networks behind them, and why simply “not writing checks” isn’t a realistic solution for many businesses.

The conversation dives into Positive Pay, a tool designed to prevent check fraud before it happens. Carter shares firsthand experience with fraud prevention, including how NPG caught a fraudulent check that would have cost years’ worth of fees. The discussion also highlights the surprising gaps in adoption—many banks assume businesses won’t pay for fraud prevention, while businesses often don’t even know the service exists.

Casali and Carter wrap up with key takeaways from a recent fraud prevention survey, revealing why businesses hesitate to adopt protective measures and what banks can do to improve adoption. Tune in for expert insights on keeping your business’s payments secure.

GUEST-AT-A-GLANCE
Sean Carter, President & CEO
Neach Payments Group
Leads fraud prevention, audits, and risk assessment for banks and fintechs.
LinkedIn  

KEY INSIGHTS
Check Fraud is Organized Crime, Not Random Theft

Check fraud isn’t just small-time criminals altering checks—it’s a sophisticated, organized effort. Criminals steal checks through targeted mailbox break-ins, sometimes even at gunpoint, and use advanced methods to wash, alter, and deposit fraudulent checks. Many businesses still assume check fraud is a rare occurrence or that it won’t happen to them, but fraudsters are systematically exploiting weak security measures in the payment system. Sean Carter emphasizes that stolen funds aren’t just lost money—they fuel activities like drug trafficking and other criminal enterprises. This highlights the urgent need for businesses and financial institutions to take proactive security measures rather than waiting until fraud happens to take action.

Positive Pay Works—But Many Businesses Don’t Use It

Positive Pay is a proven fraud prevention tool that helps businesses verify checks before they clear. According to Carter, companies using Positive Pay see a significant reduction in fraudulent transactions. Despite this, many businesses either aren’t aware of it or believe they won’t be targeted by fraud. The episode reveals a disconnect: financial institutions assume businesses won’t pay for fraud prevention, while businesses often don’t even know the service exists. The data supports Positive Pay’s effectiveness, yet many companies only adopt it after experiencing fraud firsthand. Carter argues that banks should be more proactive in educating clients and even consider requiring a waiver if businesses opt out, ensuring they understand the risks.

The Hidden Costs of Check Fraud Go Beyond Stolen Money

When fraud occurs, it’s not just about losing money—it creates disputes, damages bank-client relationships, and leads to costly legal battles. Carter explains that fraud victims often face unexpected costs beyond the stolen amount, including time spent investigating fraud, reputational damage, and potential double payments if a vendor’s check is altered. Financial institutions that fail to offer strong fraud prevention tools also risk losing business, as companies may seek banks with better security measures. The episode underscores the need for a mindset shift: fraud prevention should be seen as an investment, not an expense.

Transcript

NEACH - Wrestling Payments - Sean Carter – Exploring Positive Pay ep 3.2

[00:00:00] 

Sean Carter: The money that is stolen is not being used to go buy kids shoes and stuff like this. I mean, this is going to drugs, weapons, sex trafficking. Like, we have to stop the flow of funds. Um, and so, you know. How can, how can the industry get better at stopping check fraud? You know, it's so easy, don't write checks.

Joe Casali: Hello and welcome to Wrestling Payments. I am here. My name is Joe Casale. I'm here with my guest today, Sean Carter. Uh, Sean is typically President [00:01:00] and CEO of Niche, but today he's here as President and CEO of NPG. Sean, uh, just if people don't know, what's NPG?

Sean: Uh, Niche Payments Group is a subsidiary of Niche where we focus on more one on one individual type services for banks, credit unions, and fintechs, like audits, risk assessments, consulting, and we do a little bit of market intelligence, which was what we're here to talk about, uh, today.

So, uh, we've been in business since 2015. Um, so yeah, thanks. Thanks for having MPG on a niche podcast.

Joe: always happy to have you. You're, you're, you're a natural, so the rehearsal time is this long, this big, so it's good. Uh, all right, so let's, let's, let's, uh, paint the picture, if we will. Uh, payments has entered 2025. There's a lot of things going on. Regulation, there's government change. We just had an episode, uh, last week that talked about What we expect, what we saw in 2024 and what we expect in 2025, [00:02:00] almost a, I don't want to say it's a secret, but it's sort of almost accepted right now.

I think, disagree with me if you want, uh, that check fraud is out of control and, and yeah, it's out of control and it's going to stay out of the, out of control. So we're here a little bit to talk about. What can folks do with, uh, to help prevent check fraud? Am I off? Am I

Sean: Now, you know, it's, it's, it's an interesting thing because it is exploding, right? And there's all different ways that check fraud occurs. But there's also some simple solutions. Um, that could better, I don't want to say stop it, but better help, uh, organizations, including like ours, our size organization, um, you know, it's, it's internal controls, but there's also products that you can use, and so I, I think it's important that, People don't just throw in the white flag, I can't do nothing about it, if I write checks I'm, I'm doomed, [00:03:00] I don't think that's true, uh, we should push people away from check because the, the fraud that you see is just so easy to, uh, commit.

That, that's the, I don't want to say, I hate saying the beauty of check fraud, but that's, that's really the beauty of it is it really could be an organized group or a drunk uncle, uh, grabbing people's checks. So, you know, but the, the focus here, um, It's really interesting because us as an organization, again, like on each the membership side, like we, we, we have an obligation, right?

That's the members money. We need to make sure nothing happens to it. And then the investment is niche payments group. We also need to make sure that we're protecting that investment. So, you know, one of the things we, you know, focus on a lot Joe, when you do this in education and we do this on audits and stuff is just bringing attention to things that could work, right?

And that's, that's the hope of what we're trying to do and, and maybe dispel some myths [00:04:00] about some things around, uh, these tools like positive pay and, um, the survey we're going to talk about. There's some conflicting information right up front in the, in the sheet. Uh, which I think is interesting.

Joe: Well, hold off on the survey for a second. Let's do just a little bit more background. So, uh, back when, uh, checks, the, the digital copy of a check was made the legal equivalent of a check, we had a whole, um, move to making images of checks. Running around instead of the paper. Since then, we've seen a really big decline in check volume.

But for businesses, checks are still used all the time. And, uh, it's one of those things, positive pay, I'll sneak a little peek at it. Positive pay is one of those things that People may hear about it and not be interested in it until they get defrauded. And then they're like, Oh, what could I have done? So we're going to, we've decided to break this into two parts.

The first part is we're going to talk about NPT and niche as, as [00:05:00] companies and our own experience with positive pay. And then we're going to jump into a survey that will be available in the, the show notes and, uh, as a link on the, in the YouTube. So Sean. As president and CEO of both companies, would you like to talk about, um, our, our approach to positive pay?

Sean: Yeah. And so, um, it's really interesting because, you know, we every year when we sit down with our auditors, they're always asking about our internal controls and are we doing anything different? And, um, a few years back, um, you know, we hadn't suffered any Problems and awful. We had a nice long discussion with our financial institution, and it we still had at the time.

We've we've reduced the number of checks we write, but we still have, um, check activity. Um, we decided to go down that path of signing up for a product that would help prevent, uh, check fraud. But You know, recognizing that it does require change to the process, we kind of [00:06:00] built that into the way we do things on top of our approval process and some of those other things, but, but for us, we kind of looked at it more as an insurance payment.

Um, then a cost, right? Like it comes through on your analysis statement. So it is a, it's, it is a cost that you see very clearly and it's not certainly free. Um, there's money that we pay and everybody probably pays different depending on the bank. But, um, we looked at it more as an insurance, like just in case our internal controls fail or just in case we have a mailman that gets a little cute.

Okay. Um, when we're trying to send out mail or bring mail in, uh, we thought this was the best way to go for us. And, um, we actually, Joe, we had that check from Atlanta that came in that actually we caught because of positive pay. Um, so it, That, that check alone was probably five years worth, six years worth of the cost of, of positive pay.

Now, would we have noticed that [00:07:00] going in the account? We do go in the account every day, maybe, maybe not, um, it's hard to say, uh, but we definitely know that when you get that email that says, look at this alert, um, you know, and for me, it's, it feels great. We get to say we protected, but Joe, I'm, I'm actually gonna flip this to you cause you're actually our person that actually had to.

Change the most on how we do things because you actually go in and do the work. Just let people know. I mean, I've heard a lot that it's not easy and there is an extra step, but give people your thoughts on just how it works.

Joe: Yep. So, uh, happy to do that. Uh, we, uh, as a payment association, I really believe we are one of the top payment expert companies in the country. As a company? We're like any other company. We're, we're, you know, we have accounts, uh, accountants, we have marketing, we, we do company things, and as a payments association, we're really hot on electronic payments, [00:08:00] so to scope it, our check volume is tiny, uh, but as a, as the user of, of positive pay, your job is to, one, Whatever the checks are run, the day they're run, you need to input that information into, uh, the, your financial institution.

Now, there could be a couple ways to do that. Uh, I tried to be as technical as possible in the beginning, and I, I created an upload file, and we uploaded the file, and that was, that was a lot of work. It was, it was a little complicated. If I had a hundred checks, It wouldn't have been harder. So today, all I do is I enter each issue.

And they make it pretty easy. It's probably the easiest Excel sheet you've ever made. It's, it's who you're paying, how much, what was the check number, and um, and what their name is. And that's a distinction with positive pay we could get into later. Checking the [00:09:00] name or just checking the amount and the check number.

Um, but, The, the problems happen, and Sean knows when the problems happen, is when, you know, the, the, the one person in, in, in charge of entering those checks, takes that check piece of paper home or something, and, and puts it on the counter and forgets about it, and those checks don't get entered. That's when we get hits.

That's when, when Joe forgets to input the checks, we get, alert, alert, you, you, you have a positive pay, uh, item that needs attention. That, that attention needs to happen by noon ish. So, stepping back a second, that check Sean mentioned And we don't like to give kudos to bad guys. That check was great. It was, it was a fraudulent check, but it was, it was, it was perfect.

We, you know, if we know we didn't write the check, um, if we didn't know that, it, it looks like a, a real check. It was, uh, they, they've, they've gotten so good [00:10:00] at this fraud stuff. Um, but from a big picture perspective, if I can have the, the comfort. And I feel like I'm making an ad. I'm not making an ad. Uh, if I can have the comfort of knowing every check I wrote is going to come in for every, the right amount, uh, of, for those checks, it's, it's pretty, uh, it's pretty, put your mind at ease a little bit.

And it's not, it's, it's not that, uh, much to enter the check run. We do a check run a week. Every week we do one. Um, it's not that much to enter them. And it's definitely, it does get harder when you forget to enter them because all the checks don't come in on the same day. And you, yeah, you have to catch up.

But that's what I have. And Sean's on that alert thing as well. So he knows when I

Sean: will tell you, it is interesting because when you get it, um, you know, not that I worry every day that we're going to have fraudulent checks, but the way it comes through and you know what the product is, you take action pretty quick and, and I will tell you when we first did that, like I'm like, oh, what would my review look like?

Am I just going to go in and say, oh, [00:11:00] automatically assume Joe forgot it. They actually, you click on the image, you get to see, I can see if it's my signature or your signature, Joe. I know our vendors. I can actually use our own internal process to go and find the invoice and make sure that was for the right amount.

So if I'm ever iffy or can't get in touch with you or the other folks that work on this, you know, if you stack your controls on top of each other and then add this, it's a very, you know, easy way to say, Oh, yeah, that check was for our attorney for the board meeting. Great. I have an invoice. I know that was the amount.

Um, you know, it's it really is a nice feature. And I will say the thing you talked about about the time at noon. Um, you know, we'll get into this later about the survey and anecdotally, some things we hear, you know, that, that, that sometimes depends on your bank, the time, but I think that is one of the things as well as being able to do this on a mobile app [00:12:00] that would take positive pay to the next level because that, that That is, that is, that is an issue for some other companies.

The time for us, we're sitting at a desk, you know, but if you were a plumber, that might be an issue. If you add a small business, you know, and you, and you're underwater serving 9 million slices of pizza and you can't leave the register to go enter Yes. Pay this check. And, and there's a default, right? You get to make decisions.

Um, but it, it really is an interesting, interesting thing that. Uh, we teach so much about stacking controls. It really brings home, it really is the ball on our control process here. From approval, to signing, signing authority, how a check gets entered, and then we have this one piece. For us, it actually is a really nice conclusion, um, to that process.

And it may not be the same for every company, but it, uh, it is something that, again, It just makes you feel better. [00:13:00] It's the only way I can describe it. It just kinda, you know, doesn't mean we're not ever going to have attempted fraud or anything like that. But it just means we put ourselves in the best position to prevent it. And that's really all, all you should be looking for, right? Is put yourself in the best position not to be robbed.

Joe: The only other thought I have on it is, um, It's all the, you know, and I know the stories, and I'm sure you'll talk about the stories of positive pay is this, and positive pay is that, and positive pay is this. You know, not all good statements. Uh, on the other side of it, after, You know, a fraudulent check gets cashed and you figure it out days later.

It, you know, it's just so much easier to not, I mean, not, uh, not have that problem. And, you know, I can say everyone, every company out there should have positive pay. And I think that is a correct statement. But, uh, the, the obstacles to it are, are, uh, Need a little bit of dressing and that oh, look at that segue that leads us to [00:14:00] the survey Sean you want to talk about this what started the

Sean: Yeah, so this, this is actually a, a really interesting story of, of, um, Me, you know, you go to events sometimes and you're just there, and then you go to other events and you're really present. This happened to be an event that I was just really You know, really interested in the speakers were wonderful was put on by COCC, which is a corporate, uh, I mean, uh, core provider up here in our area to do a wonderful job.

They had a cash management forum and, you know, the subject was fraud. And, um, one of the things they were talking about was some of the statistics on their own platform. So Joe, you and I think the same. We're always thinking each has 397 members, you know, if they all have a thousand customers, what does that number look like for corporates?

So always. Doing that in my head and I'm listening to this great speaker from COCC and he said the amount of accounts that were on the platform and at first you're like, Oh, a couple thousand accounts. That's great. And then I'm like, wait a [00:15:00] minute. They have X amount of FIs on the platform. Those FIs have X amount of accounts.

That is such a small number of people using their product. And so what? When I got back from that, um, it was great because the bank that was most successful brought them the most accounts, had all wonderful things to say, and that they got there, it was really towns and municipalities, right, uh, really, really good use case.

When I got back I said, you know, if we're, if we're all agreeing that there's all this fraud out here, and we all know that there's this product here. Right? You know, forget at the beginning, forget what it costs and you have to pay. Let's, let's start from the things we know. We got a problem, and we got a product that probably solves it. What's the issue? Right? And so that was the, that was the basis for, uh, our survey. And we did a quick survey, and the other thing we did as part of this was, we said, you know what, there's other parties. That could probably really [00:16:00] help us get data, right? So we worked with a CPA firm, uh, have them send it out.

We had some of our member FIs send it out just to get, uh, some feedback. Because when you think about force multipliers like a CPA firm, they talk, our firm talks to us about this stuff, right? It's part of that interview I have to do every year. So it, it, it fit nicely, uh, to get this out and, and. To my surprise, or not surprise, how do you say that?

Not to my surprise, a lot of the anecdotal stuff we heard before we did the survey actually shows up as to why people do and why people don't have it. Um, which is really interesting. Um, and I, and I will say there's only one really Interesting nugget, from my perspective, that came out of the server. Not saying that the data's not good, but a lot of it, you're gonna go, Yeah, that's what I've heard, too.

But there was one nugget that we'll get to, that I was like, You know, the bank's thinking, This is why somebody's not [00:17:00] buying it. And the corporate's saying, I didn't even know you were selling it. Right? Like, that's a, that's an Interesting gap. Um, and you know, again, it's not to knock anybody or blame anybody, but it's an opportunity.

I think when we look at this to say, maybe there needs to be a renewed focus on this product. And I do think there's enhancements that need to be made. And like you said before, we don't want to make this a commercial. for positive pay. We're just going by our experience, but when you think about your own experience and put yourself in someone else's shoes, I can see why some corporates would say, I would love this if it could be this, if it could do this.

Um, but yeah, so that's kind of the, the, the background of the survey. We did it under, uh, did it through, you know, multiple channels. Uh, actually I think we, Got the Ohio Bankers League pushed it out for us as well, which was pretty cool. Um, just trying to get as many people to take the survey so we could glean something from it.

Uh, cause again, going back to those two pillars that [00:18:00] we know. Huge problem, product potentially solves it. Right, like, to me there's gotta be something in there that, that pushes us to be able to, uh, reduce the risk. Because remember, Joe, with the fraud, you and I talked about this two, a couple episodes ago.

The money that is stolen is not being used to go buy kids shoes and stuff like this. I mean, this is going to drugs, weapons, sex trafficking. Like, we have to stop the flow of funds. Um, and so, you know. How can, how can the industry get better at stopping check fraud? You know, it's so easy, don't write checks.

Right, remember we used to say that? And my first job here at Niche, I was holding, uh, a presentation slide for a Federal Reserve Bank speaker. Uh, rest in peace. And, uh, the gentleman was talking, in 20 years there'll be no checks. Well, I've been here

a lot longer than that, and there's still checks. And, and there's plenty of reasons, right?

I mean, Uh, we have some vendors don't take ACH, right? We [00:19:00] have people that pay us that just from a process standpoint don't want to do ACH. We had our own internal issue here trying to get over the check because people just liked the process of having the check and the proof of payment and all those things for an audit.

Um, and we're going through this now, right? With the, uh, the, uh, the grant from the state to reimburse us for training. Like, to prove payment without a check, they're making it almost impossible,

Joe: Sean as a as a side note try to leave names out But that's a really interesting story and it could be like a problem. Everyone has can you walk through that for a second?

Sean: Oh, yeah, so, uh, you know, one of these things that we, we found is that, um, there's programs out there you can get reimbursements, right? And so, we have our vendor does that, submits the application, they do the training, we can be reimbursed, keeps our costs down. But you have to prove certain things in order to get the reimbursement.

And so, [00:20:00] we used to pay them by check, and it was never an issue because we would just give a copy of the, the cancelled check, and they would have it. So this time, we had paid by ACH, and so I'm like, alright, I'm going to provide a copy of the batch. Right, I'm going to provide, uh, you know, the money, showing the money come out of our account on the day of the batch.

Like, that to me, anybody looking at it should say, this money went out. We kept, they kept coming back saying, no, we need to prove that it went to, to the vendor. And I'm like, well, wouldn't the vendor be able to just show you their account with the money coming in? Uh, these, they had no idea what an ACH batch represented because in fact, that receiver name is in the batch and it's their account number in the batch.

Um, and so this took way too long. Uh, and in fact, it ended and resulted with the vendor saying, yeah, you're probably better off paying with a check. And I'm like, Oh no, we're going backwards. Um, so it's one of those things where you, you can totally [00:21:00] understand why checks are still relevant. Um, and it's not as easy to say, Joe, just don't do it.

Um, you know, I wasted so much. I ended up having to get Our ODFI had to write a letter that said yes, Nietzsche submitted a batch on April 9th for X amount of money that went to this ABA number. And I'm reading the letter going, that's the freaking batch, I gave you a copy of the batch, right? And, uh, then they said, well, on the bank statement When your batch comes out, it doesn't show you the receiver's name, and I'm like, it's not going to.

There's multiple receivers in a batch. It's not how It's not a BillPay product. It's ACH Batch Origina Anyway, going down a rabbit hole,

Joe: then it was a really interesting rabbit hole and

Sean: frustrating.

Joe: 2025. It's still a problem.

Sean: Yep, so, so this is why these things exist until, until that happens, we need to make sure we're protecting the check the best way we know how.

So yeah, so that's kinda, so the [00:22:00] survey kinda has just been a, a thing of mine. You know, um, I just wanted to see why, you know. And I just hated saying, well, it's cost. Too much cost. I just hate when people say that without giving me data because I think a lot of businesses, they're not always focused on cost.

If the product's going to do something, they'll buy it, right? 

Joe: Right. I, I think that's important. I think, um, the, the, the cost may or may not be an issue. It's the, it's the, the time. Right. And, and you kind of alluded to it, if you know you're in the pizza place selling, selling pizza, you are on the register. You're not, you know, you're not, you don't have time for other things.

You're, you're there to make money. So not knowing it's a service. Very, very clear. Um, people, people, if it, if it doesn't matter to their day to day, they're not thinking about it. So, maybe we need to make them think this is day to day. The other thing is, in your, um, when you alluded to, uh, the bad guys getting money, this is Organized crime.

This [00:23:00] and you know, I think organized crime. I think of the mafia, but this is or I mean, these these folks are stealing the keys sometimes at gunpoint for the mailboxes. They are getting the checks and they have sophisticated programs where checks get sorted based on how they know how to corrupt them. It is organized.

It is not, you know, we used to think of hackers as some kid in a basement. Hackers are no kid, not kids in a basement. Check fraud is not, you know, the someone found a check and try to change it, uh, it is organized crime. So, let's get into the survey. What, um, what were there, I, so in the document I'm looking at, there are four, uh, points that came out.

Um, do you want to go through them? Are there more questions in the four

Sean: Yeah. So no, so we can go, we can take them one at each time and um, you know, so the, the first, the first point of the FI survey, the 80 percent of them offer them, but then we asked if you don't offer positive pay as a financial institution, [00:24:00] you know, what was the reason that they hadn't introduced the product?

So some Uh, folks pointed to the cost, right? Um, the cost and resource constraints of a project. Um, so cost to implement the program, which I do know anecdotally it's costly depending on who the vendor is for the bank. But one of the things I, I found interesting in number one was that there was also a number of folks that said there's a lack of client demand,

right? Well, you know, I, I, to you, to your point earlier, when somebody has a fraud, I'm sure there is high demand after the fraud, right? Um, sometimes I think you gotta create demand, right? And so I think that's where we should be with this product. And in fact, um, one of the other parts of the survey, number four, businesses who don't use it, One of the reasons they don't use it, they said they haven't heard about it.

So do we have a banker thinking somebody's not [00:25:00] going to want the product because of cost, but they're not actually offering it because they assume it's a no, and now they say it's because of cost, and the other side is, I didn't even know you had it. The, the, the really important part of the survey, Joe is number two, which we, we shared our experience as niche and it saved us.

Everybody that uses it sees a reduction in fraud. So FIs off that offer to those customers, their customers that are on the platform absolutely have less fraud than other customers. Corporates that use it see a reduction in fraud, right? Like it works, uh, and again, it may not work for everybody as we talked about, and there could be some improvements, but the data tells us that a business with positive pay, they're, it's working for them.

They're, they're, they're stopping or seeing less fraud than they did before they had the product, which to me, uh, is a win. Um, now. [00:26:00] Here's the thing, when you think about, um, the, there are different types of positive pay products, right, there's payee positive pay, um, so when you blanket it, uh, this is where it gets really interesting to me, Joe, as you mentioned these, these organized units, as a financial institution, you may be offering product A right now, But if you're in an area where the criminals are committing crime B,

Joe: mm

Sean: your product, you may need to roll something else out because if you're in a pocket that has seen a certain type of check crime and if this product isn't doing everything it's supposed to do, that's going to, that's going to affect whether other customers are even going to buy or sign up because they're going to say, well, we have this product, but you're still seeing fraud, um, when it's a fraud product.

So, I do, I do want to keep that in mind for folks, that there is different types of positive pay, uh, products for check, and you need to think about, as a financial [00:27:00] institution, which ones you're offering. Uh, and as a, as a corporate, you need to understand it enough to say to the bank, I need the next level one, because what we're seeing, or industries like mine are seeing, is that it's this type of, uh, fraud.

So, as part of the survey, those answering did say they see a reduction in fraud. The corporates, um, really see a reduction in fraud, and we actually found that 40% Of the businesses were actually victims of fraud as part of the survey. That's a, that's a really big number, you know, and, um, you know, 90%, right?

So those that are aware, uh, their FI provide positive 90 percent have signed up. For that service since they had the fraud. So that goes back to your point, right, is once you have a fraud, this is easy to bring to somebody, and in fact, a bank could force it on you, right, to say, if we're going to keep doing business, you're either going to do this or we're going to [00:28:00] make you sign a waiver that says you don't want the product, right?

Um, so that's important. Um, you know, 77 percent of people, a measurable, measurable reduction in fraud or fraud attempts, right? So, you know, that lends you to ask, like, I wanted to ask for the questions like, do we know if, if the crime is that organized where people would know which banks to not even try, uh, checks from, right?

Joe: would be nice, yeah,

Sean: I wonder if that is why they're seeing not only just stopping it up front, but a reduction in attempts. Uh, I wonder if, if people give up and say, hey, we've tried to push five banks on, five checks onto this account at this bank and they caught them all. Uh, I'm wondering if there's a way that the bad guys are like, hey, forget it.

So we're not going to try, we'll move on. Um, but it is, you know, it's something to think about 

Joe: mm hmm. 

Sean: you know, when you talk about lack of knowledge, though, if, you know, it runs that one of those weird [00:29:00] gamuts, imagine the bad guys know more about the product and who's using it than the designed audience.

And so I do think we have a gap, a knowledge gap for businesses about. positive pay. Um, and I, I don't think we have a knowledge gape at the banks. I think banks are making strategic decisions on why or why not to offer it. Um, but if we have another year, like 2024 with check fraud, I just don't know how as an FI that offers accounts to businesses that this isn't something that's part of your suite of products.

Um, that's, you know, again, at some point, um, You have to realize that this is going to work. This is the one thing that can help you prevent those frauds. Because what else happens with frauds? Now you've got an argument between bank customer who's liable, you've got lawsuits, the relationship is damaged.

Think about that when you're thinking about cost to rule something out as well.

Joe: Mhm. Just a quick note for people who are [00:30:00] listening. Uh, tell me if I'm wrong. The two types of positive pay I know is one the one we have. I'm happy with because if a check number that's not in my Entry comes in. It's going to say, Hey, you got a problem. If an amount is different, it's going to say, Hey, you got a problem.

The second type, and this is really a more sophisticated fraud, say, uh, we pay a vendor 10, 000. They can wash the name off the check, and the check number will be the same, the 10, 000 will be the same, but the wrong person gets paid. So we think, Hey, we're fine. We paid our

Sean: Yeah. That's what they call the payee positive pay, um, which is a, you know, next level up. Um, you know, it's really interesting because like you said, the way we were happy as the, Hey, check number amounts, you know, we feel comfortable. I mean, we review our, um, stuff as it comes in. We look at our accounts daily.

So that's how we would probably catch a [00:31:00] a changed check, uh, but if you're a more sophisticated business than niche, with a lot more checks, you know, and you're in an area where this is the type of fraud that's prevalent, it may be worth the conversation with your bank. You know, and even, even in this survey, it was, it was hard to believe that 50 percent of people that don't use positive pay, they just believe they're not gonna be, or they don't have 

Joe: Not going to happen to me. Not going to happen to me.

Sean: you know, that is, um You know, that's, I think when the auditors do that interview, they're hoping you answer foolishly like that so that they can write it up in the report to say, hey, management needs to take a harder look at this. But, um, you know, I wonder what do banks think about That 50 percent of their customer base, right?

Like, uh, is there a way for a financial institution to do, um, a better job of making everybody realize how easy it is to wash a check? How easy it is? Uh, you know, if it [00:32:00] hasn't happened to it's probably just numbers that luck right now, right? It's not because somebody goes, Oh, I don't want to rip off this laundromat or Hey, Joe's a good guy.

I'm not going to bother his restaurant. Um, Really interesting that 50%. And if you go back, like there's other surveys. If you look at the AFP fraud survey, they had a very similar number that talked about even people that had fraud weren't going to use a product or they were going to continue to write a check.

Continue writing checks even if they had continued fraud. It's like just yeah, you know, I'm macho I'm gonna I'm gonna tell you you bad guy, right? Uh huh.

Joe: Now that it happened to me, it won't happen again.

Sean: yeah, it's it's it's really interesting that we have businesses that think like that but You know, again, that, that was the purpose of this was just to try to figure out why do we have a gap between we know we have a product that can help but we have all this fraud and then when you dig in some [00:33:00] of it's just natural human behavior.

It's not going to happen to me, but I think the areas we're going to focus on trying to help people with this. Hey, make sure you're educating so that 50% 50 percent that never heard about it, hears about it. And then let them make a decision if they don't want to buy it or not. I would instruct banks that offer this, if somebody doesn't want it, you know, make them sign a waiver, right?

Um, you know, and that gets into, well, can you make them do that if there's a fee with it? I would Talk to legal about that. But we're at the point with check fraud where, you know, we have to get a little bit more dramatic, I think, as as financial institutions with our customers and as a corporate demand these services from your institution.

If they're not offering it, you know, Then they, you know, either find a way to go all electronic or, or push them, uh, in that direction. And, and if you're a user like us, talk to your bank about what could make it better. [00:34:00] Like, let's say you have it, but you don't use it. Why aren't you using it? Is it, well, I can't leave my register when the alerts come.

Okay, maybe there's a mobile text messaging app that could work. You know, like,

Joe: let me, uh, let me close that circle because we, you, you mentioned the pizza place and we, we have a shared background at a pizza place. If positive pay was in at the pizza place and you're on the register and can't answer it, well, great. The check gets returned. 

Sean: yeah, set it as a default, right? Like, you know, Friday at 1 o'clock, you're not walking away from those registers, trust me. Um, so yeah, you can, I mean, even, even at that level of protection, um, the check gets returned and Um, you know, maybe you deal with your vendor or your supplier to say, hey, you know, you know, we, we had an issue here, right?

You can always smooth, it's better to smooth that over than to say somebody washed the check and now your vendor didn't get paid, but somebody else did. Now you've got to double, double the payment, right? You have to [00:35:00] kind of pick your, pick your bad news there. But uh, yeah, so overall, again, surveys out there, Joe is going to link to this.

LinkedIn pages, each payments group, but, um, You know, if you want to chat more about that, obviously we, we would love to do that and um, you know, we're just happy that we got some results to share and, uh, it kind of validated some of the things we heard anecdotally, uh, but also there were some nuggets that were like, okay, that's, you know, it's understand, everything in here is understandable.

That's kind of why I was jazzed about the results. It's not like you don't get anything and scratch your head. Yeah. Right. I can understand why somebody would say, Oh, I'm not, I'm never going to be a victim because they haven't been. I also can understand someone saying, I didn't know about it when there's an assumption by the FI that maybe it's too costly.

Um, and so I think, you know, that's, that's where we're at. That's why we did it. And thank you for letting us chat about this

Joe: Absolutely. Great topic. Thanks a lot. See you guys [00:36:00] next time.

Sean: Thank you.