Q:

What is a prenote?

A:

Quick Answer

A prenote is a test transaction a banking institution uses to make sure the provided account information is valid before setting up an Automated Clearing House, or ACH, transfer, according to the N.C. Office of the State Controller. Prenotes are optional zero-dollar transactions frequently used for pre-authorizing payroll direct deposit.

Continue Reading
What is a prenote?
Credit: YinYang E+ Getty Images

Full Answer

Prenotes are transmitted through the ACH network, allowing the initiating bank to get official confirmation of an account number and routing number from the receiving bank, Thurston First Bank states. Once the account is validated, the initiating bank must wait six days before sending a live transaction with an actual dollar amount. When a payee decides to receive the ACH payments in a different account, another prenote is sent to verify the new account information.

Learn more about Bank Accounts

Related Questions

Explore