Positive Pay System (PPS) is a mechanism to prevent check fraud. PPS adds an extra security layer, so every large transaction is verified before processing.
Positive Pay System: As the methods of fraud in the country are becoming more complex, at least you have one less thing to worry about – check fraud. Actually, the Reserve Bank of India (RBI) implemented the Positive Pay System (PPS) in 2021. This system works to protect against check fraud for large transactions. PPS adds an extra security layer, so that every large transaction is verified before processing.
Positive Pay System (PPS) is a fraud prevention mechanism in which account holders have to share some important details with their bank before issuing a cheque of Rs 50,000 or more. These details include cheque number, date, amount and name of the payee. When the cheque is presented for clearing, the bank compares the submitted information with the physical cheque. If there is a mismatch, the transaction is marked for further investigation, thereby preventing cheque-based fraud.
Required for high value cheques
Currently, PPS is required for cheques of Rs 5 lakh and above processed through the Check Truncation System (CTS). Earlier, from October 1, 2024, banks had made the use of PPS mandatory for cheques of Rs 2 lakh and above presented in CTS and cheques of Rs 5 lakh and above for transfer transactions. If customers do not submit the PPS mandate for these high value cheques, the bank will return the cheque with the reason Advice Not Received.
How does PPS work?
Issuing a cheque with PPS is very simple. Cheque issuers have to submit their cheque details – cheque number, date, amount and receiver’s name – at least 24 hours before presenting the cheque for clearing. This can be done through internet banking or manually at the counter. Banks match this information with the cheque presented. Any minor error in the cheque is subjected to a verification process to confirm its authenticity.
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