What is a prenote in banking?

A prenote in banking refers to a test transaction that is sent to verify an account number and routing number before initiating an electronic transfer of funds. Prenotes help ensure accuracy and prevent errors in electronic transactions, such as Direct Deposit or ACH (Automated Clearing House) transactions. Prenotes typically contain a small amount of money, such as $0.01, and are typically processed within a few business days. They are not considered a real transaction and are not posted to the actual account balance. Instead, their purpose is to confirm the accuracy of the account information to prevent more significant financial errors.