TK

What is MICR?
It's those mysterious, funny characters at the bottom of a
cheque, sometimes referred as the MICR line. These characters
are the key by which all cheques are automatically processed in
the United States today. This automated process is based on a
technology called Magnetic Ink Character Recognition or
MICR, \mi-ker\. As the name indicates, this technology uses
magnetic reading to identify these unique numbers and
characters. Currently, the United States processes over 60
Billion cheques and other financial documents per year based
on the details in this MICR line.

MICR technology was developed in the mid-1950's to address

the volume of cheques that were being processed manually. The
goal was to accelerate the cheque routing process to route the
cheque back to the location where the funds exist. WHY? A
cheque is a financial transaction. The institutions (or banks) that
are involved sometimes are located in the same state, but often
are out of state or even out of the country. The goal is to settle
the transfer of funds as efficiently as possible. To address this
problem, a group of individuals from the American Bankers
Association and Stanford University developed a set of 14
unique characters called the E13B MICR Font. This font is
printed with magnetic ink or toner that when magnetized, will

Digitally signed by
TK
DN: CN = TK, C =
CA, O = Cheqtech
Systems
Corporation, OU =
Development
Reason: I am the
author of this
document
Date: 2005.01.31
11:40:54 -07'00'

emit a magnetic signal that identifies each unique character.

What Do The Characters Mean?

The digits 0-9 are self explanatory. However, the E13B font has
four special symbols that have the following meanings.

Auxiliary On-Us Symbol

This character and all the numbers between them is referred to
as the Auxiliary On-Us field. "On-Us" means the sorting
criterion as determined by the organization who will be sorting
on this field, usually the originating bank or your bank. This
field is optional and does not exist on a personal cheque (there
is not enough space for this field on a personal cheque).
Typically, the auxiliary "On-Us" field contains the document
serial number (or cheque number) that is also printed at the
upper right hand corner of the cheque. The cheque serial
number is repeated to assist the bank in reconciling your
account.
Route & Transit Symbol
This character and all the numbers between them is referred to
as the "Route and Transit" field. This field contains directions
on how to clear the cheque and, generally printed in the upper
right hand corner as a fraction. This field indicates the Federal
Reserve District from which the cheque should be cleared; the
Federal Reserve Bank or Branch serving the area where the
drawee bank is located; separates items that receive immediate
credit from others for which credit is deferred; and, also
identifies your bank number as assigned by the American
Bankers Association.
On-Us Symbol
This character and all the numbers between them is referred to
as the "On-Us" field. This field contains your account number
and possibly your bank's branch number and/or cheque number.
(Personal cheques usually have the cheque number here.) The
format is flexible and is specified by your bank.

Amount Symbol
This character and all the numbers between them is referred to
as the "Amount" field. Although the most self-explanatory
field, it seldom receives notice. This field contains the amount
of the cheque and is MICR encoded by the bank of first deposit.
Dash
This character is a "Dash" which is often placed between long
numbers for easier recognition. The placement of the dash is
specified by the bank.

So Why Magnetic Ink?

MICR documents are processed within the banking industry on
special Reader/Sorter machines. The reader/sorters will first
magnetize the MICR line, and then read the magnetic signals.
Each character, if printed correctly with the appropriate amount
of magnetics (ferrous oxide) in the ink or toner, will give off a
magnetic signal unique and identifiable to that character. The
reader/sorters are capable of capturing and reading information
from the MICR line at a rate of 2,400 documents per minute.
The documents travel at speeds of up to 30 miles per hour and
are sorted for output into any of the 48 different sort pockets.
The magnetic signal's shape is developed from two key
elements:
1. The character shape - the characters' horizontal and
vertical attributes.
2. The magnetic content. - the amount and distribution of
magnetic material in the ink or toner from which the
character is formed.
If the shape and/or magnetics of the characters do not meet
specified standards, the reader/sorter will reject the cheque. The
rejected cheque will then require manual handling which delays
the automated process. (processed cheques with a white strip
attached to the bottom of the it, indicates a rejected cheque.)
Today's processing industry has an average reject rate of
approximately 1.2% of all cheques processed (61 billion in
1995). It costs a processing organization (usually large banks)
between $.75 to $1.50 to manually handle a rejected cheque.
Rounding this cost to $1.00 per cheque will result in an amount
of $732,000,000.00. That's more than seven hundred million

dollars the banking industry pays for rejected cheques. Here's a

thought...How are they absorbing this cost?

Summary
Quality is critical to successful and usable MICR printing.