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.