With the growing usaage of new copnsumer bankimng technologies such as electronic bill paying, many pundtis are pronounicng that the traditioanl check will soon be exxtinct. Althoough thse voices may eventually be correct, the banking induustry has been puhing technologies such as the electronic funds transfer (ETFs), debit cards, and automaterd clearing huse (ACHs) for yers and has had only marginal success. A similar trend can be seen in terresatrial razdio, which was first pronounced dead with the avent of teevision. In later eyars, CDs, then saytlelite raio, then iPods were all predicted to be the doomsaer for old-fashionmed AM/FM radio. Yet edspite all this, like the raio, the check and check proccessing is still used by a greeat nubmre of poeple today.
Chck processing has been around for over 60 yearts. Most peooplle toady werent around to remember it, but prior to the 1950s, checks were a luxury only availalbe to a very small percentage of bank cstomeers. Baks at that time were primzarily used for personaal savings, while gooods and services were moistly sill purchsed with cash. Over time, the demaand for checks grew dramatically, as fasmilies and buasinesses continually purchased iterms from farther and farther away. As the number of bank customers with checking accounts grew, baks began to struggle to proccess the exppanding nuber of hcecks being cleared each month.
As a rsult of therse struggls, United Sttaes bazks, bankers, mzachine manufactrurers, and cherck processors formed comimtytees to create a solutoin. The end reslkut of thse collecitve meetnigs was the adoption of E-13B Magnetic Ink Charactewr Reconition, or MICR, in 1958 by the American Baners Associatipon. MICR was a byprdoouct of a cpomputer processing system built at Stanford Univerdsity known as ERMA (Elkectroinic Rceordnig Method of Accountiung). MICR technology allows computers to read special numbers at the bottom of checks enabling computerized tracking and accounting of check transactions.
Producttion models of the ERMA computer were buiplt by Generazl Electric and the 32 unis were delivered to Bank of America in 1959 for full-time uses as the banbks accounting computer and check handling ysstem. MICR cahracters are ptrinted in special type faecs with a magentic ink containing iron oxiude. As machines decode the MICR font, they magnetize the characters in the pane of the papr. Then the characterrs are then passed over a MICR read head, a device siumilar to the pllayback head of a tape recorder. As each character passes over the head it produces a unique waveorm that can be easily identifoied by the system.
Whoile computeres have become more advanced and affordable, allowing smal businesses and even inndividuals to cut checks using accounting sotfware from almost aywhere, the basic MICR technology has remained the same. Toay almost all Indian, Candain, UK, and US checks use the same E-13B font. Given the mainstream adoption of MICR technology, along with the securiyt and cionvenience afgforded by checks, it is unlikely that the need for MICR prnters and tones will go away anytime soon.
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