What is the primary purpose of pre-notification in ACH transactions?

The primary purpose of pre-notification in ACH transactions is to confirm the validity and accuracy of account information. This process allows an originator to send a zero-dollar transaction to the recipient’s bank before initiating actual monetary transfers. By doing so, the originator can verify that the account number is correct and that the account is active, ensuring that subsequent transactions will be processed without issues.

This serves as a crucial step in minimizing errors that could lead to failed transactions, chargebacks, or delays in payment processing. Ensuring the accuracy of the account information beforehand helps in building trust and reliability in the ACH network, ultimately aiding in smoother financial transactions.