MICR: What Is a Magnetic Ink Character Recognition Line?

Magnetic Ink Character Recognition (MICR) Line

Magnetic ink character recognition (MICR) is a technology used primarily to identify and process checks. The MICR on a check is the string of characters that appears at the bottom left of the check. It consists of three groups of numbers, including the bank routing number, the customer's account number, and the check number.

The MICR includes, from left, a nine-character routing number, a 12-character account number, and a four-character check number.

It is called a magnetic ink character recognition line in reference to the print technology that is used to enable a machine to read, process, and record information.

How the Magnetic Ink Character Recognition (MICR) Line Works

The magnetic ink character recognition line enables a computer to rapidly read and record numbers or other information from printed documents, such as a personal check. In this case, that information is a check number, routing number, and account number.

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

The MICR number, which is sometimes confused 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. The magnetic ink allows a computer to read the characters even if they have been covered with signatures, cancellation marks, bank stamps, or other marks.

MICR lines help facilitate automatic check-clearing when banks send their checks to central processing systems at the end of the day. They are designed to be easily read by people as well, so that check information can be communicated easily.

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

MICR Check Scanner

Every check sent is processed by a clearinghouse or 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 may be processed several times at different banks and Federal Reserve Centers.

Part of that process is reading the identifying information on the check. The MICR line mechanized that process. A scanner, or reader-sorter computerized machine, is used to process the information magnetically printed on the checks, including routing number, account number, and check number.

During the clearing process, a check may be read several times at extremely high speeds. A single reading takes less than 1/1000ths of a second, according to Troy Group, a producer of MICR-adapted printers and related products.

Special Considerations

While magnetic ink character recognition was first used to print information on checks, the technology has been adapted to other applications.

A variety of financial documents in the United States are encoded with MICR technology. Credit card invoices, direct mail, coupons used for rebates, and negotiable orders of withdrawal (NOWs) may also use the technology.

Benefits of the MICR Line 

One of the benefits of the magnetic ink character recognition line is its ability to facilitate the use of a routing number to process checks and deduct the payment amounts. A routing number or routing transit number is a nine-digit numerical code which banking and other financial institutions use to clear funds and process checks.

The routing number identifies the bank branch that holds the account from which funds are to be drawn. Wire transfers and direct deposits often rely on routing numbers as well.

Detecting Fraud

Combating fraud is a constant battle in the financial services industry. The definition of fraud is an intentionally deceptive action that is designed to provide the perpetrator with an unlawful gain. A range of fraud types exists, including tax fraud, credit card fraud, wire fraud, securities fraud, and bankruptcy fraud.

The magnetic ink character recognition line makes some forms of financial fraud difficult by using tamper-proof magnetic ink and unique fonts. Thus, MICR makes it difficult to alter checks.

Check altering generally entails changing the name of the payee or the amount of the check, or both. Section 3-407 of the Uniform Commercial Code (UCC), a set of business laws that regulate financial contracts, breaks down the term alteration even further, with nine articles dealing with separate aspects of banking and loans.

For instance, a fraudster may attempt to cash a photocopied check through a teller at a bank branch. The photocopied MICR line immediately alerts the teller that the check is fake.

Since MICR technology helps detect and prevent fraud, banks and other financial institutions use it to minimize losses.

Frequently Asked Questions

The Bottom Line

Magnetic ink character recognition is still around some 70 years after it was developed because it solved two big problems faced by banks: The processing of checks had to be mechanized, and fraud had to be made more difficult.

Its three components, including a routing number, an account number, and a check number, together are a unique identifier of a check and the person who signed it. Just as importantly, it is printed using a special ink and custom fonts that make fakes difficult if not impossible to create.