What Is a Magnetic Ink Character Recognition (MICR) Line?

What Is a Magnetic Ink Character Recognition (MICR) Line?

Let me explain what a magnetic ink character recognition (MICR) line is—it's that unique series of characters printed on a check that shows the bank routing number, account number, and check number, allowing for automated processing and helping to stop fraud.

You see, MICR is a technology mainly used to identify and process checks. The MICR on a check is the string of characters at the bottom left, made up of three groups: a nine-character routing number, a 12-character account number, and a four-character check number.

We call it a magnetic ink character recognition line because of the print technology that lets machines read, process, and record the information.

How the Magnetic Ink Character Recognition (MICR) Line Works

The MICR line allows a computer to quickly read and record numbers or other information from printed documents, like a personal check. In this case, that means the check number, routing number, and account number.

The American Bankers Association (ABA) developed this system in the late 1950s, and it was later recognized as an industry standard by the American National Standards Institute.

The MICR number, which people sometimes confuse with just the account number, is printed on the check using magnetic ink or toner, less than an inch above the bottom of the document. This magnetic ink lets a computer read the characters even if they're covered by signatures, cancellation marks, bank stamps, or other marks.

MICR lines make automatic check-clearing easier when banks send their checks to central processing systems at the end of the day. They're designed to be easily read by people too, so you can communicate check information without issues.

The numbers are usually printed in one of two specially designed fonts: E-13B or CMC-7. E-13B is used primarily in North America, Australia, and the United Kingdom, while CMC-7 is mainly in Europe and parts of South America.

MICR Check Scanner

Every check you send gets processed by a clearinghouse, a bank, or both. They validate the check and finalize the transaction, deducting the correct amount from one account and crediting it to another. A single check might be processed several times at different banks and Federal Reserve Centers.

Part of that process involves reading the identifying information on the check. The MICR line mechanizes this: a scanner or reader-sorter machine processes the magnetically printed information, including the routing number, account number, and check number.

During clearing, a check may be read several times at very high speeds. According to Troy Group, which makes MICR-adapted printers and related products, a single reading takes less than 1/1000th of a second.

MICR is why checks are so uniform in format. The layout and position of the data must be rigidly placed so machines can read them properly.

Special Considerations

While MICR was first used for checks, the technology has been adapted to other applications. Various financial documents in the United States are encoded with MICR, including credit card invoices, direct mail, rebate coupons, and negotiable orders of withdrawal (NOWs).

Benefits of the MICR Line

One key benefit of the MICR line is how it uses a routing number to process checks and deduct payments. A routing number is a nine-digit code that banks and financial institutions use to clear funds and process checks.

This routing number identifies the bank branch holding the account from which funds are drawn. Wire transfers and direct deposits often rely on routing numbers too.

Detecting Fraud

Fighting fraud is an ongoing battle in financial services. Fraud means an intentionally deceptive action for unlawful gain, and it comes in forms like tax fraud, credit card fraud, wire fraud, securities fraud, and bankruptcy fraud.

The MICR line makes some financial fraud harder with its tamper-proof magnetic ink and unique fonts, making it difficult to alter checks.

Check altering usually involves changing the payee's name, the amount, or both. Section 3-407 of the Uniform Commercial Code (UCC), which regulates financial contracts, defines alteration in detail with nine articles on banking and loans.

For example, if a fraudster tries to cash a photocopied check at a bank teller, the photocopied MICR line alerts the teller that it's fake.

Since MICR helps detect and prevent fraud, banks use it to minimize losses.

The routing number, account number, and check number combine to create a unique identifier for each check.

What Is a MICR Number?

A MICR number is the line of characters on a check printed with unique ink that a reader-sorter machine can read. This process automated check processing and made counterfeiting harder.

How Is MICR Used in Banks?

The MICR system has been in use since the late 1950s. It improved things by mechanizing check processing and making fraud tougher. Banks worldwide adopted it, which is why check formats are so uniform—it ensures readers can process the MICR numbers.

What Is MICR Data on a Check?

The string of characters at the bottom left of a check identifies the issuing bank branch, the payer's account number, and the check number in sequence.

From left to right, it shows: the nine-character routing number for the bank branch, the 12-character account number for the payer, and the four-character check number indicating its place in the series. It looks like this: 000000000 000000000000 0000.

The Bottom Line

Magnetic ink character recognition is still in use about 70 years after its development because it solved two major banking problems: mechanizing check processing and making fraud harder.

Its three components—a routing number, account number, and check number—create a unique identifier for the check and its signer. Importantly, it's printed with special ink and custom fonts that make fakes hard to produce.