New
Join experts from Nacha and Modern Treasury for a webinar on fraud, risk, and the ACH network.
Learn more.
Modern Treasury Logo
Product
Products
PaymentsLedgersVirtual Accounts
Platform
Why Choose UsHow it WorksIntegrationsSecurityFor Finance TeamsFor Developers
CustomersPricing
Developers
Documentation
Quick StartAPI ReferenceGuidesChangelog
Support
Get help
Service status
Company
Company
AboutContactJobsJournal
Support
Learn
Get help
Service status
Journal
Log in
Sign up
Arrow
Hamburger MenuHamburger Menu
Learn
Guides
Quickstarts
API References
Support
Learn
ACH
What is an ACH Prenote?
ACH
What is ACH?
ACH API
What is an ACH Prenote?
ACH Reversals
ACH Payment Returns
ACH Return Codes
SEC Codes
What is Same-Day ACH?
RTP
What is RTP?
Wire Transfers
What is a Wire Transfer?
SWIFT
What are SWIFT Payments?
SWIFT Codes
FedNow
What is FedNow?
Bank Accounts
What is an FBO account?
What are Virtual Accounts?
Payment Industry Bodies
TCH
NACHA
CHIPS
Fedwire
File Standards
BAI2
NACHA files
Core Banking Systems
Sort Codes
Back Office
Bank ReconciliationPayment OperationsContinuous AccountingWhat is Money Transmission?What are Lockboxes?What is a Deposit Account Control Agreement?What is Cash Management?What is Treasury Management?What are Incoming Payment Details?

What is an ACH Prenote?

Definition
Resources

A prenote or prenotification is a zero dollar payment to validate the account and routing details of a bank account before debiting or crediting it. 

To understand how a prenote works, let's take an example where pre notes could be used frequently. When you're setting up a way to pay your utility bill automatically, the utility company could use a prenote to validate your account before debiting it every month. They'll send an ACH pre note to validate your bank account before processing your first automatic payment.

Prenotes are an alternative way to verify bank account information instead of using micro-deposit based verification or account data aggregators like Plaid. The advantage of using prenote account verifications is they don’t require your counterparty to take any action to verify their account. They also don’t require that counterparty to share sensitive information like their username and password for their bank account. The downside is that prenote account verifications take about 3 days to complete.

How do prenotes work?

Prenotes are essentially test transactions that you can make without using real funds. 

To send a prenote, all you need to do is make a $0 ACH credit to the counterparty’s bank account. The prenote is considered successful if you don’t receive an ACH Return or Notification of Change related to it from the counterparty’s bank. If the prenote is not successful, you’ll need to use the information in the return code or NOC code to update the bank account details before sending another prenote. 

Prenote vs direct deposit

Direct deposit is a payment method where funds are transferred right into the recipient's bank account of choice. The relationship between direct deposits and a prenote is simple; the prenote (or pre-notification) is used to verify the recipient's bank account. Once the prenote account verification is complete and deemed successful, the recipient's bank account is approved for direct deposit and funds can be deposited and accessed.

How long is a prenote period?

The typical timeline for an ACH prenote is outlined below. So, for example, if you initiate a prenote on a Monday before your bank’s ACH cut-off time, you can start making payments on Thursday provided the prenote did not result in an ACH Return or Notification of Change. 


Do other payment methods support prenotes?

Today, prenotes are specific to ACH. Other payment methods like wire transfers and RTP rely on alternative methods for validating account information. 

Modern Treasury customers can use the Routing Number API to validate routing information. It supports validating information for multiple payment methods like ACH, Wire Transfer, RTP and SEPA to name a few.

To learn more about bank account verification, take a look at these articles:

  • Verifying bank accounts with Microdeposits
  • Verifying with Plaid


Modern Treasury makes it easy to use ACH prenotes for bank account verification

Modern Treasury is a payment operations platform built for the entire cycle of money movement. Our APIs and software applications directly integrate with your bank accounts, allowing you to process payments using ACH, RTP, Wires, and multiple other payment methods 2x faster than your existing solution. Modern Treasury automates payment reconciliation and accounting, giving you back time and control over your payment operations.

Sign up
Talk to a payments advisor
Sean Bolton
Written by:
Sean Bolton
Last updated:
May 5, 2022
Last updated:
May 5, 2022

More 

ACH

 resources

Learn
ACH Payment Returns

A return is a credit or debit entry initiated by the Receiving Depository Financial Institution (RDFI) that returns a previously originated payment to the Originating Depository Financial Institution (ODFI).

ACH Reversals

An ACH reversal refers to an erroneous ACH payment that a payment originator requests to take back, or reverse.

What is Same-Day ACH?

Same-Day ACH is an improvement to the ACH network that allows the processing of credit, debit, and return transactions several times a day.

Journal
A Complete Primer to ACH: Understanding The Four Key Players

In the United States, moving money is big business. The ACH Network moves $51 trillion dollars in 23 billion electronic financial transactions per year. That’s almost 70 payments per person.

Add ACH Reversals

Today we’re happy to share that we’ve released a new ACH Reversals feature in our Payments product. ACH Reversals lets you reverse an ACH payment you initiated with the click of a button or an API call.

A Beginner's Guide to ACH

ACH, or Automated Clearing House, is an electronic network used to communicate financial transactions.

Definition
Resources
Products
PaymentsLedgersVirtual Accounts
Platform
Why Choose UsHow it worksCustomersIntegrationsSecurityFor Finance teamsFor DevelopersPricing
Developers
Quick StartAPI ReferenceGuidesChangelogStatus
Company
AboutJoin UsJournalContactLearnGet help
Integrations
JP Morgan Chase
Silicon Valley Bank
Wells Fargo
QuickBooks
NetSuite
Guides
What is Automatic Reconciliation?
How to Build an Insurance Company
Which Bank Partner is Best for You?
Made with  🌯  in San Francisco
Made with  🥐  in Menlo Park
Made with  🌮  in Los Angeles
Made with  ☕️  in Seattle
Made with  🍺  in Portland
Made with  🧁  in Arcadia
Made with  ❄️  in Minneapolis
Made with  🥯  in New York City
Made with  🍷  in Amsterdam
Made with  🍕  in Chicago
Made with  🍩  in Humboldt
Made with  🎸  in New Jersey
© Modern Treasury Corp
PrivacyTerms of Service