Modern Treasury supports the origination of ACH prenotes.

A prenote or prenotification is a $0 ACH payment order used to validate the account and routing information of a counterparty before sending live transactions. They are an alternative to using microdeposits, and do not require the counterparty to take any action during verification. The disadvantage of prenotes is that they take some time to complete validation.

Live payments can begin on the third banking day after the prenote has settled, provided no return has been received, and any Notification of Change (NOC) related to the prenote has been resolved.

In this guide, we will walk through an example of originating an ACH prenote.

1. Create the prenote

ACH prenotes are $0 ACH Payment Orders in Modern Treasury. The first step is to Create a $0 Payment Order.

curl --request POST \
  -u ORGANIZATION_ID:API_KEY \
  --url https://app.moderntreasury.com/api/payment_orders \
  -H 'Content-Type: application/json' \
  -d '{
    "type": "ach",
    "amount": 0,
    "direction": "credit",
    "currency": "USD",
    "originating_account_id": "0f8e3719-3dfd-4613-9bbf-c0333781b59f",
    "receiving_account_id": "5acec2ef-987b-4260-aa97-b719eeb0a8d5"
  }'

This API call will return a response that includes the payment order object.

{
    "id": "82171186-519f-44d9-a2dd-9c5de4054797",
    "object": "payment_order",
    "type": "ach",
    "amount": 0,
    "direction": "credit",
    "originating_account_id": "0f8e3719-3dfd-4613-9bbf-c0333781b59f",
    "receiving_account": {
        "id": "5acec2ef-987b-4260-aa97-b719eeb0a8d5",
        "object": "external_account",
        "account_type": "checking",
        "party_name": "John Smith",
        "party_type": null,
        "party_address": null,
        "account_details": [
            {
                "id": "3994463f-7652-4e4f-b9c6-9ee06427cccc",
                "object": "account_detail",
                "account_number_safe": "3334",
                "account_number_type": "other",
                "live_mode": true,
                "created_at": "2021-03-15T21:52:05Z",
                "updated_at": "2021-03-15T21:52:05Z"
            }
        ],
        "routing_details": [
            {
                "id": "c20c51e7-c4a7-4637-b6c9-8c0709667922",
                "object": "routing_detail",
                "payment_type": "sen",
                "routing_number": "021000021",
                "routing_number_type": "aba",
                "bank_name": "GOLIATH NATIONAL BANK",
                "bank_address": {
                    "id": "cc3cf074-00f6-456d-b3f8-e727de7f63f9",
                    "object": "address",
                    "line1": "36535 Nia Lane",
                    "line2": null,
                    "locality": "Watsicaview",
                    "region": "AR",
                    "postal_code": "93751-4071",
                    "country": "US",
                    "live_mode": true,
                    "created_at": "2021-03-15T21:52:05Z",
                    "updated_at": "2021-03-15T21:52:05Z"
                },
                "live_mode": true,
                "created_at": "2021-03-15T21:52:05Z",
                "updated_at": "2021-03-15T21:52:05Z"
            },
        ],
        "created_at": "2021-03-15T21:52:05Z",
        "updated_at": "2021-03-15T21:52:05Z",
        "name": null,
        "metadata": {},
        "live_mode": true,
        "verification_status": "unverified"
    },
    "receiving_account_id": "71fae619-afa6-45e6-8630-ce4d0b3d6387",
    "receiving_account_type": "external_account",
    "accounting_category_id": null,
    "accounting_ledger_class_id": null,
    "currency": "USD",
    "effective_date": "2021-04-02",
    "priority": "normal",
    "description": null,
    "statement_descriptor": null,
    "remittance_information": null,
    "metadata": {},
    "status": "approved",
    "counterparty_id": "928db55e-6552-4aaf-96d7-10c693922b1f",
    "transaction_ids": [],
    "charge_bearer": null,
    "foreign_exchange_indicator": null,
    "foreign_exchange_contract": null,
    "nsf_protected": false,
    "originating_party_name": null,
    "ultimate_originating_party_name": null,
    "ultimate_originating_party_identifier": null,
    "ultimate_receiving_party_name": null,
    "ultimate_receiving_party_identifier": null,
    "current_return": null,
    "reference_numbers": [],
    "live_mode": true,
    "created_at": "2021-04-02T02:35:00Z",
    "updated_at": "2021-04-02T02:35:00Z"
}

2. Monitor the prenote

Once the payment order has been created, it will be transmitted to the bank prior to the next cutoff. Note that originated prenotes will not show up as transactions in Modern Treasury, but the payment order's status will be updated.

You may monitor the payment order's status via the API or by subscribing to the Payment Orders webhooks.

If no return is received within 3 business days following the payment order's effective date, Modern Treasury will complete the payment order, mark the external account as verified and you may begin live transmission. Note that completed ACH payment orders may still be returned.

You can monitor for returns on the payment order by subscribing to the Returns webhooks.

If the payment order is returned, you must correct the error denoted by the return code and submit a new prenote.
If a Notice of Change (NOC) return is received, Modern Treasury will automatically update the counterparty data accordingly and will complete the prenote. You may begin live transmission.

Sandbox

ACH prenotes are supported on the Gringotts Wizarding Bank (GWB) account. Prenotes at Gringotts will be completed every 15 minutes.

To simulate a return on an ACH prenote, see Simulating an ACH Return.