/close-up-of-blank-bank-check-sample-against-white-background-92871728-cfdab3334aab49c8acf138a58bf63a91.jpg "What Is a Magnetic Ink Character Recognition (MICR) Line? 1")
Magnetic Ink Character Recognition (MICR) Line
Magnetic ink character recognition (MICR) is a know-how used primarily to establish and course of checks. The MICR on a verify is the string of characters that seems on the backside left of the verify. It consists of three teams of numbers, together with the financial institution routing quantity, the shopper’s account quantity, and the verify quantity.
The MICR consists of, from left, a nine-character routing quantity, a 12-character account quantity, and a four-character verify quantity.
It’s referred to as a magnetic ink character recognition line in reference to the print know-how that’s used to allow a machine to learn, course of, and report data.
Key Takeaways
- Magnetic ink character recognition is the string of characters on the backside left of a private verify that features the account, routing, and verify numbers.
- MICR numbers are designed to be readable by each people and sorting tools.
- They can not be faked or copied, attributable to the usage of magnetic ink and distinctive fonts.
- The advantages of the know-how embrace enhanced safety towards fraud and mechanization of verify processing.
- MICR was developed within the late Fifties and is now in use globally.
How the Magnetic Ink Character Recognition (MICR) Line Works
The magnetic ink character recognition line permits a pc to quickly learn and report numbers or different data from printed paperwork, reminiscent of a private verify. On this case, that data is a verify quantity, routing quantity, and account quantity.
The system was developed by the American Bankers Affiliation (ABA) within the late Fifties and was later acknowledged as an business customary by the American Nationwide Requirements Institute.
The MICR quantity, which is typically confused with simply the account quantity, is printed on the verify utilizing magnetic ink or toner, lower than an inch above the underside of the doc. The magnetic ink permits a pc to learn the characters even when they’ve been lined with signatures, cancellation marks, financial institution stamps, or different marks.
MICR traces assist facilitate computerized check-clearing when banks ship their checks to central processing techniques on the finish of the day. They’re designed to be simply learn by folks as nicely, in order that verify data could be communicated simply.
The numbers are normally printed in one in every of two specially-designed fonts, referred to as E-13B and CMC-7. Each are used worldwide, with the E-13B used primarily in North America, Australia, and the UK. The CMC-7 font is principally utilized in Europe and elements of South America.
MICR Verify Scanner
Each verify despatched is processed by a clearinghouse or a financial institution, or each. They validate the verify and finalize the transaction, deducting the right amount from one account and crediting it to a different. A single verify could also be processed a number of instances at totally different banks and Federal Reserve Facilities.
A part of that course of is studying the figuring out data on the verify. The MICR line mechanized that course of. A scanner, or reader-sorter computerized machine, is used to course of the data magnetically printed on the checks, together with routing quantity, account quantity, and verify quantity.
Through the clearing course of, a verify could also be learn a number of instances at extraordinarily excessive speeds. A single studying takes lower than 1/1000ths of a second, in keeping with Troy Group, a producer of MICR-adapted printers and associated merchandise.
MICR is the explanation why checks are so uniform of their format. The format of the verify and the place of the information on it should be rigidly positioned in order that it may be learn by the machines.
Particular Issues
Whereas magnetic ink character recognition was first used to print data on checks, the know-how has been tailored to different purposes.
A wide range of monetary paperwork in america are encoded with MICR know-how. Bank card invoices, junk mail, coupons used for rebates, and negotiable orders of withdrawal (NOWs) can also use the know-how.
Advantages of the MICR Line
One of many advantages of the magnetic ink character recognition line is its skill to facilitate the usage of a routing quantity to course of checks and deduct the fee quantities. A routing quantity or routing transit quantity is a nine-digit numerical code which banking and different monetary establishments use to clear funds and course of checks.
The routing quantity identifies the financial institution department that holds the account from which funds are to be drawn. Wire transfers and direct deposits usually depend on routing numbers as nicely.
Detecting Fraud
Combating fraud is a continuing battle within the monetary companies business. The definition of fraud is an deliberately misleading motion that’s designed to offer the perpetrator with an illegal acquire. A spread of fraud varieties exists, together with tax fraud, bank card fraud, wire fraud, securities fraud, and chapter fraud.
The magnetic ink character recognition line makes some types of monetary fraud tough through the use of tamper-proof magnetic ink and distinctive fonts. Thus, MICR makes it tough to change checks.
Verify altering usually entails altering the identify of the payee or the quantity of the verify, or each. Part 3-407 of the Uniform Business Code (UCC), a set of enterprise legal guidelines that regulate monetary contracts, breaks down the time period alteration even additional, with 9 articles coping with separate features of banking and loans.
As an illustration, a fraudster could try and money a photocopied verify by a teller at a financial institution department. The photocopied MICR line instantly alerts the teller that the verify is faux.
Since MICR know-how helps detect and stop fraud, banks and different monetary establishments use it to attenuate losses.
The routing quantity, account quantity, and verify quantity mix to create a novel identifier for every verify.
Ceaselessly Requested Questions
What Is a MICR Quantity?
A magnetic ink character recognition line (MICR) is a line of characters on a verify printed with a novel ink that enables the characters to be learn by a reader-sorter machine. Introduction of the MICR reader-sorter course of allowed verify processing to be automated whereas making it tougher to counterfeit checks.
How Is MICR Utilized in Banks?
The MICR system has been in use because the late Fifties. It was a notable enchancment as a result of it allowed for the mechanization of verify processing whereas making it tougher to commit verify fraud. Banks across the globe adopted the system.
Because of this the format of financial institution checks is so uniform. It needs to be to ensure that the readers to learn the MICR numbers.
What Is MICR Knowledge on a Verify?
The string of characters on the backside left of a verify identifies the financial institution department that it’s issued from, the account variety of the payer, and the variety of the account holder’s verify in a consecutive collection.
From left, the road shows the next data:
- The nine-character routing quantity that identifies the financial institution department
- The 12-character account quantity that identifies the payer
- The four-character verify quantity that signifies which verify in a collection that the account holder has used.
It seems to be like this: 000000000 000000000000 0000
The Backside Line
Magnetic ink character recognition continues to be round some 70 years after it was developed as a result of it solved two massive issues confronted by banks: The processing of checks needed to be mechanized, and fraud needed to be made tougher.
Its three parts, together with a routing quantity, an account quantity, and a verify quantity, collectively are a novel identifier of a verify and the one who signed it. Simply as importantly, it’s printed utilizing a particular ink and customized fonts that make fakes tough if not inconceivable to create.