DEFINITION of 'Magnetic Ink Character Recognition Line (MICR)'

Magnetic ink character recognition (MICR) is the information that appears at the bottom of a check. This includes the bank's routing number, the customer's account number, and the check number. The magnetic ink character recognition line is printed using technology that allows certain computers to read and process the printed information.

Using MICR, computers can rapidly internalize routing numbers, account numbers, and other information from printed documents including checks. MICR numbers, letters and symbols are printed with magnetic ink or toner, usually in one of two major MICR fonts. The magnetic ink allows the computer to read the characters even if they have been covered with signatures, cancellation marks or other marks.

BREAKING DOWN 'Magnetic Ink Character Recognition Line (MICR)'

MICR (often pronounced "micker") is used mainly by the banking industry. A benefit of MICR over other computer-readable information such as bar codes is that humans are able to read MICR. The two MICR fonts that are used worldwide are E-13B and CMC-7. These unique fonts are used to help computers recognize the characters and limit check fraud.

Magnetic Ink Character Recognition Line and Routing Numbers

One of the benefits of the magnetic ink character recognition line is its ability to quickly facilitate the use of routing numbers. A routing number (or routing transit number) is a specific nine-digit numerical code, which banking and other financial institutions use for the purpose of clearing funds and/or processing checks in the United States. As it appears on the front of a check check, the routing number represents the bank that holds the account from which funds are to be drawn. Wire transfers and direct deposits often rely on routing numbers.

Magnetic Ink Character Recognition Line and Fraud Prevention

Unfortunately, fraud happens throughout the financial services industry. The definition of fraud is an intentionally deceptive action, designed to provide the perpetrator with an unlawful gain. A range of fraud types exist, including tax fraud, credit card fraud, wire fraud, securities fraud, and bankruptcy fraud.

The magnetic ink character recognition line can help prevent financial fraud through the use of its special magnetic ink and unique fonts. For example, MICR makes it challenging to alter checks. An altered check is when someone intentionally and materially changes the name of the payee or the amount of the check.

The Uniform Commercial Code (UCC) Section 3-407 breaks down the term alteration even further. The UCC is a set of business laws that regulate financial contracts. Nine articles deal with separate aspects of banking and loans.

RELATED TERMS
  1. ABA Transit Number

    An ABA transit number that appear on standard checks and are ...
  2. Magnetic Stripe Card

    Used for retail transactions and to provide access to secure ...
  3. Altered Check

    An altered check is a check or another negotiable instrument ...
  4. Securities Fraud

    Securities fraud is a form of white-collar crime that disguises ...
  5. Check Conversion

    Check conversion is a reformatting service offered by banking ...
  6. Tax Fraud

    Tax fraud occurs when an individual or business entity willfully ...
Related Articles
  1. Investing

    Is Twitter's Character Limit Holding It Back?

    Twitter is relaxing rules on character limits in replies, but some say limits are holding it back.
  2. Insights

    How to Protect Yourself From Credit Card Fraud

    Credit card fraud is sharply up. Learn the worst types and how to protect yourself.
  3. Insights

    Mortgage Fraud: Understanding and Avoiding It

    It's important to know what condition would it classify as mortgage fraud and know about the common schemes and scams you should avoid.
  4. Insights

    Detecting Financial Statement Fraud

    Find out how to tell if a company is manipulating its financial data, so you don't invest in the next Enron.
  5. Insights

    What Is The New Credit Card Chip Good For?

    Under current U.S. credit card requirements, credit card issuers are required to issue chip cards as of October 1, 2015. Instead of swiping your card as you do now, you will slide the card into ...
  6. Insights

    The Evolution Of Credit Card Security

    With the increase in credit and debit card fraud, these measures have been taken to ensure your financial security.
  7. Personal Finance

    How to Cancel a Check

    If you've had a personal check lost or stolen, the next best step is to cancel the check by putting a stop payment on it.
  8. Insights

    4 Massive Frauds You've Probably Never Heard Of

    Here are four historically significant but obscure, large-scale frauds from the previous two centuries.
  9. Personal Finance

    How to Write a Check in 6 Easy Steps

    For those of you who are new to check writing, here is a step-by-step guide on how to fill one out.
  10. Retirement

    How to Spot Pension Fraud Before It Hurts You

    Don't let pension fraud threaten your livelihood after retirement. Here's what to watch out for.
RELATED FAQS
  1. When do checks expire?

    There is a legal grace period for cashing checks, but depositors and issuers may risk overdraft fees if a late check is presented ... Read Answer >>
  2. How long does it take a check to clear?

    It usually takes two days for a check to clear, but in some cases it may take longer. Discover how banks treat large deposits ... Read Answer >>
  3. Do common stock owners have any protections against bankruptcy or fraud?

    Learn about common stock ownership including the standing of holders in the event of bankruptcy or fraud, and familiarize ... Read Answer >>
Trading Center