The positive pay system

Highlights of a positive pay system

What is a Positive pay system?

Who has implemented positive pay system?

How does positive pay system work?

Why a positive pay system launched?

How does CTS clearing house work?

How much positive pay system cost?

What is a positive pay system, what is a CTS clearing

What is a positive pay system?

A positive pay system is a new way of cheque payment in CTS clearing house. In a positive pay system, the account holder has to inform his/her bank regarding cheque payment to the beneficiary.

It’s the protection of payment of cheque in CTS clearing house. If the account holder is using a positive pay system then he/she is protecting her/his cheque for secure payment to the beneficiary’s account.

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Who has implemented positive pay system?

The positive pay system is launched by RBI to secure CTS clearing house so that fraudulent transactions can’t take place in CTS clearing house. The positive pay system is started from 1 January 2021.

How does positive pay system work?

The positive pay system is a digital system in which account holders have to inform the bank about cheque payments to beneficiaries.

Do account holders have to inform about every cheque?

No, there is a certain amount in which customers don’t need to inform the bank.

Amount Limit

1. Cheque Rs 50000/ don’t need to inform.

2. Cheque Rs 50000 to 500000/ it’s optional.

3. Cheque More than Rs 500000/ it’s compulsory to inform the bank.

What information account holder need to inform in the positive pay system?

After the cheque is issued to the beneficiary or thirty parties. The account holder needs to inform about cheque to the bank by using the following ways.

1. Internet banking

2. Mobile banking

3. ATM

4. Bank website

Account-holders have to login in NetBanking or mobile banking app or using atm and using the official website of the bank to inform about the cheque that cheque has been issued in name of this person and cheque amount and date of the cheque along with cheque number. This information will be saved in the database and it will be forwarded to the CTS clearing house where CTS clearing house official will check information and they will allow payment of cheque to beneficiary’s account.

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The following information has to inform in the positive pay system

1. Account number

2. Cheque number

3. Date of cheque

4. Amount of cheque

5. Transaction code

6. MICR code

7. Payee name

This information must be informed to the bank by using ATM, Internet banking, mobile banking, and officials website of the bank.

Why a positive pay system is launched?

A positive pay system is launched by RBI (Reserve Bank of India) to protect Money from cheque drawers and to provide a secure environment for the CTS cheque clearing house.

The following points are important for the CTS cheque payment system.

1. To inform about the payee

2. To inform the bank about cheque payment

3. To stop fraud transaction through CTS clearing house

4. To protect digital banking

5. To deliver money in a secure way to the beneficiary’s account

6. To motivate digital CTS clearing house

How does CTS clearing house work?

CTS clearing house means cheque truncation system. CTS is a digital cheque clearing payment system. Every bank has its own CTS clearing house where they clear all cheques of a different bank.

How does payment of cheque in clearing house clear?

1. Firstly whenever we receive a cheque from a drawer we deposit it in our bank account in our bank.

2. Customer deposit cheque in the cheque dropbox.

3. Branch official collect all cheque and scan all cheques and send them to the CTS clearing house which is known as a service branch

4. Here scan means they make a digital copy of cheques and send a digital copy of cheques along with the account number in which they will be credit.

4. Service branch sorts all the cheques according to their MICR code.

5. MICR code plays a vital role in CTS clearinghouse because of MICR code service branch sorts all bank cheques according to MICR code because each bank has a unique MICR code in their cheque.

6. After sorting of MICR code in cheques service branch send cheques in different service branch of a different bank.

7. Each service branch receive CTS clearing cheques and they check all checkpoint to clear a cheque.

 8. Checkpoints are

1. Account holder balance available

2. Account holders signature

3. Mode of payment

4. Date of cheque

5. Payee name

6. Instructions of drawers

7. Mode of operation of account singly or jointly

9. After checking all checkpoint service branch official will debit the account and send the amount to the beneficiary’s service branch

10. Beneficiary’s service branch collect the amount from the sender service branch and credit the same amount to the payee account

How much does positive pay system cost?

There is no cost for the adoption of a positive pay system. A positive pay system is free of cost service. It’s an intimation process for the CTS cheque clear house. Account holder need to inform about cheque to the bank via online or whichever is option is available for customers

Q&A.

Q. What is a CTS service branch?

Ans. CTS service branch is a place where bank officials work and they collect a digital cheque of clearing from their branches and digital cheque copies from different service branches. They clear cheque in CTS clearing house. It’s a CTS clearing house which is known as the service branch.

Q. We don’t follow a positive pay system?

Ans. If you will not inform about the cheque then the bank official will not allow your cheque for CTS clearing and it will be considered as a bounced cheque or intimation not received from the drawer.

Q. Does a positive pay system time-consuming?

Ans. Yes, It may be time-consuming but it will provide a secure environment for the CTS clearing house.

Q. Does every customer need to inform about cheques?

Ans. In a positive pay system, it is not compulsory for every cheque drawer. it compulsory for those who are issuing a high-value cheque to beneficiary’s or its depend on the bank rules how much amount they are allowing in positive pay system without intimation of the drawer.

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