Mitigating Payment Fraud with Treasury Services

Mitigating Payment Fraud with Treasury Services

Author:  Lindsey Hofelt, Director, Commercial Payments Advisor

With 65% of organizations reporting fraud attempts in 2023, payment fraud is a growing concern for modern businesses, according to the most recent AFP survey. The comprehensive report also indicates that attack methods of attack are evolving, with check fraud and business email compromise (BEC) becoming particularly prevalent.

To fight payment fraud, your business must adopt robust prevention strategies.Fortunately, leading banks are now offering several services to help you mitigate the risk of financial loss through fraud.

Finding the Right Payment Fraud Prevention Solutions for Your Process​

Before equipping your business with fraud controls, you should discuss your operations and payment processes with your bank. Some fraud solutions are geared toward check payments while others are designed to help avoid risk with electronic payments.

Key services available to help prevent payment fraud include:

• Check Positive Pay: Businesses upload a file of authorized payments, and the bank validates all incoming checks against this list before processing. Companies are notified of exceptions and can decide to pay or decline based on an image of the check.
• ACH Positive Pay: Your business provides the bank with an approved list of vendors who are authorized to debit your account. When a request for payment is presented, your bank reviews the details against the list you supplied, including amount, entity name and frequency. Transactions that do not meet the established profile are rejected by default and sent to your business for review. If you wish to make the rejected payment, simply login to your dashboard before the end of the business day and override the default.
• Reverse Positive Pay: Acting as an alternative to Check Positive Pay, customers are notified when checks are presented for payment. The business has until the end of each day to reject any fraudulent checks to ensure your bank is able to recall the funds.
• Check or ACH Debit Block: Your business has the ability to block all checks or ACH transactions from clearing. For instance, if your business has a payroll account and only sends payments by check, you may want to add an ACH debit block because this account is unlikely to use this this type of transaction. Likewise, if you have an account set up to receive funds, ACH debit block would help ensure that funds are not fraudulently sent.

Depending upon your business accounts and how you handle finances, your bank may recommend one or more of these solutions to help mitigate your risk of payment fraud.

Dual Control Means More Control Over the Payments Process

In addition to the services listed above, businesses can take advantage of Dual Control to fight payment fraud. Dual Control is a security measure that requires two or more individuals to approve a transaction before your bank processes a payment. Dual control enhances security by ensuring that no single person has full control of the payments being sent from your business accounts.

At FNBO, we help your company adhere to best practice standards in Dual Control, such as sending approval requests to multiple individuals. This step ensures payments can be approved promptly and improves the odds that fraudulent transactions can be identified.

Segregating duties is another way to improve security and help avoid payment fraud. By appropriately separating assignments, you ensure that individuals initiating payments are not the same ones approving requests for payment.

Enacting fraud controls over your business payment process is crucial in helping to protect against financial losses and ensuring transaction integrity. By collaborating with your bank, you can receive tailored solutions and expert guidance to enhance your fraud prevention strategies.

Learn more about protecting against payment fraud for your business, or connect with an FNBO representative to determine what product will best meets your needs.

About the Author

Lindsey works closely with each client and provides tailored solutions for cash management needs, fraud protections and innovative payments. By learning about businesses and their specific needs, she can provide a holistic approach to each client to help achieve their goals.