A prenote, or prenotification, is a zero-dollar test transaction used to validate the accuracy of bank account information before initiating a live transaction. Prenotes are commonly used in different payment systems such as Automated Clearing House (ACH), wire transfers, and direct deposits. In the context of direct deposit payroll, a prenote is a test transaction that is sent to an employees bank account before the actual payroll direct deposit is made. The purpose of a prenote is to reduce the risk of failed transactions due to incorrect account information. A prenote authorization is simply a test to make sure that the banking information provided is correct before an employee can get paid.
During the prenote period, which is typically three banking days, the prenote status is pending, and the bank routing and account numbers are verified. After the prenote period has passed, the status changes to complete, and an employee direct deposit bank account prenote status must be complete before direct deposit payroll can be processed and deposited into that bank account.
In conclusion, prenotes are an essential component of electronic fund transfers that help ensure the accuracy and efficiency of financial transactions. By verifying account information before initiating a live transaction, prenotes reduce the risk of failed transactions due to incorrect account information.
