An ACH prenotification, often called a prenote, is a non-monetary entry used to test whether routing and account information can be accepted through the ACH Network. It can reduce avoidable errors, but it is not a payment and does not prove every fact about the person who supplied the account.
The originator prepares a zero-dollar version of the intended entry
The business or other Originator provides its originating financial institution with the routing number, account number, account type and other required ACH data. Apart from the amount and transaction code, the prenote should reflect the information expected in the later live entry so the same destination is being tested.
Prenotes are optional for ACH Standard Entry Class codes generally, although a particular use case, agreement or risk program may call for account validation. The Originator still needs the authorization and other requirements that apply to the eventual credit or debit; sending a prenote does not create that authority.
The entry travels through the ordinary ACH chain without moving funds
The originating depository financial institution, or ODFI, validates and transmits the file to an ACH Operator. The Operator routes the entry to the receiving depository financial institution, or RDFI, identified by the routing number.
Because the entry carries no dollar value, it does not credit or debit the receiver's account. Its purpose is operational: give the receiving institution an opportunity to evaluate whether the account information can accept the type of ACH entry being proposed.
The receiving bank can accept, return or correct the information
If the account cannot accept the entry as submitted, the RDFI can return the prenote using the applicable reason. When the account is valid but specified information needs correction, the RDFI may send a Notification of Change so the Originator can update future entries.
The Originator monitors both returns and Notifications of Change and applies valid corrections before live activity begins. Ignoring an account-type correction or other response can turn a useful validation step into a repeated processing exception.
No response provides limited validation, not complete identity proof
After the applicable waiting and response period, no return or Notification of Change can support the conclusion that the account is open and can accept ACH entries. That is narrower than confirming the customer's identity, ownership of the account, authority to debit it, available funds or the absence of fraud.
For higher-risk activity, a prenote alone may not be commercially reasonable. An Originator may combine it with customer authentication, contractual authorization, micro-entry verification, an account-validation service or other controls suited to the product and fraud risk.
Operations retain evidence and monitor later results
The bank and Originator retain the submitted data, file acknowledgments, settlement date, returns, changes and the date live entries became eligible under their process. Reconciliation confirms that the test and later activity use the intended account information.
Return rates, repeated corrections and customer complaints are monitored after live entries start. A successful prenote is one point-in-time signal, so later evidence of a closed account, changed instructions, unauthorized activity or another exception still requires appropriate investigation and response.
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