Payments Watch

I have often wondered, why can’t consumers also take advantage of a “positive pay” feature on their checking accounts.

For years banks have offered businesses positive pay products where pending debits (checks to be paid) are provided to the business before posting. The business can decision whether to pay the item or not. With paper checks this is an expensive process which involves capture of the items, notification of the client and the potential returning of items to the collecting bank. This feature is cost prohibitive for the regular consumer.

With ACH and image exchange, why not make electronic debit transactions available to the consumer ahead of posting and provide a period where they can make a pay/no pay decision? If they don’t make a decision in the specified time period, the default action could be to simply pay the item. The challenge is timely notification - it would require that the customer could be reached at any time, anywhere - perfect for mobile banking. The consumer, for example, could be notified via sms and provide direction via a response to the message if they so choose.

This has a number of benefits - returns could happen more quickly, perhaps allowing the collecting bank to take action before any money has changed hands. It could also help address such issues as the ACH scam I mention in a previous post by allowing for a more convenient, proactive resolution instead of relying on regulatory resolutions that inevitably are very inconvenient to the consumer.