What is Positive Pay System (PPS) for Cheques: Limit, Process & How Does It Work

A Positive Pay System (PPS) for cheques is a security measure utilised by banks to safeguard against fraud. It usually involves providing the bank with details of issued cheques, including the cheque number, date, and amount. When you present the cheque for payment, the bank cross-checks it with the provided information. 

If there is a discrepancy, such as a mismatch in the details or unauthorised cheques, the bank alerts you for verification before processing the payment. This proactive approach helps in preventing any fraudulent transactions and ensures the integrity of the payment process. Go through this guide, to understand this pay system in detail.

What is a Positive Pay System (PPS)?

The RBI implements the PPS system in banks to stop fraud involving cheque payments, such as tampering or altering cheques. Under this system, the drawer of the cheque verifies important cheque details. These details are then rechecked again when the cheque is presented for payment. If the details provided by you match with those in the cheque, the payment goes through, otherwise, the cheque is sent back.

Is Positive Pay Mandatory?

No, it is not mandatory to use a positive pay system. However, some banks like the Bank of Baroda, HDFC Bank, Punjab National Bank, and ICICI Bank have made this positive pay confirmation compulsory for cheques of Rs. 50,000 and above. 

Positive Pay System Limit

A positive pay system has a limit of Rs. 50,000 and more. If a cheque is for a lower amount, it will not be covered by this pay system.

Positive Pay Details

In a positive pay system, a cheque issuer needs to submit the following details:

• Cheque Number
• Customer Account Number
• Cheque Date
• Name of the beneficiary or payee
• Cheque Amount

How Does a Positive Pay System Work?

A positive pay system operates by requiring an issuer of a cheque to provide specific details such as the customer’s account number, cheque number, date, amount, and beneficiary name. The account holder submits these details via registered email, branch visit, or internet or mobile banking.

Usually, these details are submitted a day before the cheque is presented by the payee for smooth payment processing. Upon receiving the details, the bank verifies them with the presented cheque instrument before processing the payment.

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