What Are the Advantages of MICR?

• MICR is an acronym that stands for magnetic ink character recognition. MICR uses magnetic ink in order to print routing and account numbers on the bottom of checks. The system was created in the 1950s by the American Bankers Association. MICR helps banks mechanize the process of check processing, which allows them to process large volumes of checks.

Standardization

• All MICR transactions use one of two typefaces, which include E-13B and CMC-7. CMC-7 font is utilized on all checks in some European countries, including France, while the E-13B font face is used in India, the United States, Canada, and the United Kingdom. All checks include the same standardized information, which includes the check number, the account number, and the routing number of the bank. Since all checks within a country use the same font, banks are able to easily read the checks. In the United States, the American National Standards Institute determines the standards for printing MICR checks.

Accuracy

• Before MICR was developed in the 1950's, check information had to be manually entered into a computer system in order to be processed by the Automated Clearing House (ACH). This process was inaccurate due to human error. Tellers could input the wrong information into a computer. E-13B information on a check is read on a small machine that automatically pulls the information off of a check and enters it into a computer system. The error rate when using MICR checks is almost zero, which protects consumers and banks from routing funds to the wrong bank or pulling funds from the wrong account.

Speed

• Large banks may process hundreds of thousands of checks on any given day. Entering information into a computer system manually can take up a teller's time, which would cause a bank to have higher labor costs. Banks usually possess a larger MICR machine which will take stacks of checks and sort them by their destination, as the sending bank will send the checks to the receiving bank in order for the check to clear. The bank can then send out batches of checks to the proper destination electronically or by mail.

Fraud Prevention

• Because MICR uses a special magnetic ink that is not available to the public, it is more difficult for criminals to create phony checks. The process for manufacturing checks is extremely demanding, making it difficult for thieves to create a facsimile of a check. MICR also makes it difficult for a criminal to manipulate the E-13B numbers on an existing check.