What Is an ABA Transit Number?
ABA transit numbers, also known as ABA routing or routing transfer numbers, are used to identify specific U.S. financial institutions and appear on standard checks. Basically, it is a nine-digit numeric address for each bank.
- An ABA transit number is a set of numerals that identify a specific U.S. financial institution.
- Without ABA transit routing numbers, it would not be possible to deposit a check using a mobile phone.
- Each financial institution recognized by the Federal Reserve has its own ABA transit routing number.
- ABA transit numbers allow employers to deposit checks automatically and for those checks to clear faster than a manual check.
- The numbers are also used in Fedwire transfers, and each digit making up the ABA routing number plays a role in the process.
Understanding ABA Transit Numbers
Sometimes referred to as a check routing number, ABA transit numbers were developed by the American Bankers Association in 1910 to indicate check processing endpoints. Since then, the numbers' use has expanded to include participants in check clearing between banking institutions, automated clearinghouses, and online banking activities.
The numbers are also used in Fedwire transfers, and each digit making up the ABA routing number plays a role in the process. In the past, the first four digits represented the bank’s physical location issued by the Federal Reserve Routing System. In 2019, due to the frequency of mergers and acquisitions of banks, these numbers may not represent a physical location.
The next two digits represent the Federal Reserve bank that is being used to route the electronic transaction. The seventh digit in the number identifies the assigned Federal Reserve check processing center for the bank, and the eighth represents the Federal Reserve district the bank resides in.
The last digit represents a complex mathematical equation that uses the first eight digits. The checksum is a safety measure. If the first eight digits do not equal the final digit, the transfer is marked as questionable and rerouted for manual processing, a far lengthier process.
If you are unclear about your bank's ABA transit number and don't have a check handy, simply call the bank. They can give you the institution's ABA number over the phone.
The ABA routing number appears in two forms on most checks: as a machine-readable nine-digit number on the bottom left (followed by the checking account number), and as a fraction at the top. The first form, known as the magnetic ink character recognition (MICR) form, is the one used to process checks.
The second is a holdover from when checks were manually processed and contained most of the same information in a different format. The second form is still used as a backup in case the machine-readable format is illegible. The number in MICR form, whether magnetic or not, allows computers to "read" or recognize the numbers.
To qualify for an ABA transit number, a financial institution must be eligible to hold an account at a Federal Reserve bank.
Example of How to Use an ABA Transit Number
ABA transit numbers are useful for receiving automatic payments, like a paycheck. In that case, you give your ABA transit number along with your checking account number to your employer. The banks will take care of everything else.
In the past, physical paper checks were mailed to the recipient or the recipient's bank, which took considerably more time than sending a check electronically. In 2004, the Check 21 Act, allowed checks to be cleared electronically and almost automatically versus having to wait for a check to arrive, and then clear in an account. The ABA transit number plays a vital role in the expediency of check processing.
What Is an ABA Number?
An ABA number is a set of nine digits that identify specific U.S. financial institutions. They are usually found on the bottom left-hand corner of a check or the information portal of an online account. The number is used for facilitating financial transactions, such as wire transfers and direct deposits.
Do All Banks Have an ABA Number?
Yes, all banks have an ABA number that is used to identify the specific bank and facilitate financial transactions. The ABA number is found on a check issued by the bank as well as through a bank customer's online portal.
Is There a Difference Between an ABA and a Routing Number?
No, an ABA number is also known as a routing number and consists of nine numeric digits to identify specific U.S. financial institutions in order to facilitate financial transactions.