Prenote

What a prenote is

A prenote, short for pre-notification, is a zero-dollar entry sent through the ACH network before a business starts sending live payments to an account. It checks whether the routing number and account number are valid for ACH processing. The entry uses special transaction codes and carries an amount of $0.00, so no money moves.

Businesses use prenotes during setup for payments such as payroll or vendor disbursements, and after account details change. A prenote is an account-data check, not proof that the recipient owns the account, has funds available, or authorized a payment. You still need the required authorization or notice before sending live ACH entries.

A prenote checks account details, not payment authorization, available funds, or card-processing rates.

How it works

You, as the ACH Originator, submit the prenote through your bank using the recipient’s account information. The receiving bank checks the entry and sends a return or a Notice of Change if it identifies a problem. A Notice of Change supplies corrected account details; a return means the entry could not be processed.

Allow 3 business days after the prenote’s effective date before sending the first live payment when your bank’s ACH instructions specify that waiting period. If a return or correction arrives, fix the account details and follow the bank’s process before sending a live entry. A new account-information change can require another prenote and another waiting period.

What it means for your business

The main benefit is fewer payment errors at setup. Catching a bad routing or account number before payroll or a vendor payment helps prevent a failed transfer, follow-up work, and a delayed payment. The tradeoff is time: a 3-business-day prenote period pushes the first live payment date out.

A prenote is an ACH operations tool, not a card-processing fee. The research available for this entry identifies no standard prenote fee or standard dollar amount. Do not treat it as an interchange or card-network charge. If your bank bills a prenote-related service, compare the charge with the bank’s ACH fee schedule and the service description on your bank records.

Where it appears on a bank statement

A prenote is more likely to appear in your bank’s ACH activity or cash-management report than on a card-processing statement. In BAI2 reporting, code 396 identifies ACH Pre-notification. The entry amount is $0.00, which distinguishes it from a live ACH debit or credit.

If you see a fee near a prenote entry, separate the bank’s service charge from the zero-dollar entry itself. Match the fee description and amount against the bank’s ACH fee schedule. A prenote does not explain a change in your card processor’s markup or network fees.

What you can actually change

1. 01
   Verify the account details. Confirm the recipient’s routing number and account number before creating the prenote. After a correction or return, update the details before sending a live payment.
2. 02
   Plan the first payment date. Build in the 3-business-day wait when your bank’s ACH instructions require it. Start the prenote early enough to avoid delaying payroll or a vendor payment.
3. 03
   Separate any service fee. Look for BAI2 code 396 for the $0 prenote entry, then compare any separate bank charge with the ACH fee schedule. Do not count it as a card-processing fee.

Frequently asked questions