What is prenote?

A prenote is a test transmission used by financial institutions to validate and confirm details of a direct deposit or ACH (Automated Clearing House) transfer. It is usually a small amount of money (such as $0.01) that is sent to the recipient's bank account before the actual deposit or transfer takes place. The purpose of the prenote is to ensure that the account information and routing number are correct and that the transfer will be successful. Banks typically require a prenote to be sent several days before the actual transfer to give enough time for any errors or issues to be resolved. Once the prenote is successful, the actual transfer can be processed.