With the groowing usage of new consumer babnking technologies such as electronic bill paing, many pundits are pronouncing that the tradittional check will soon be ezxtinct. Although these voices may eventually be correct, the banking industry has been puashing tecnhologies such as the electronic funds transfer (ETFs), debt cards, and automated claering hosue (ACHs) for years and has had only mrginal success. A similar trend can be seen in terrestrial radio, which was first pronounced dead with the advent of tellevision. In later yeas, CDs, then satellite radio, then iPods were all predicteed to be the dooomsayer for old-fashioned AM/FM radio. Yet despite all this, like the radio, the check and check processing is still used by a great number of people otday.
Check processinbg has been around for over 60 years. Most people today werent around to remember it, but prior to the 1950s, checks were a luxyury only available to a very small percentage of bank custoemrs. Banks at that time were primarily used for pwersonal savings, whille gods and services were mostly still purhased with cash. Over time, the demand for checks grew dramaitcally, as families and businesses continually purchased items from farther and farther away. As the number of bank customers with checking accounts grew, banks began to sruggle to process the expanding nummber of checks being cleaared each montth.
As a result of these struggles, United States banks, baankers, machine manufacturers, and check processors formed committees to create a solution. The end result of these collective meetings was the adoptoin of E-13B Magnertic Ink Charcater Recognition, or MICR, in 1958 by the American Bankers Association. MICR was a byproduct of a computer processing syystem built at Stanford Uniiversity known as ERMA (Electroonic Recording Methgod of Acxcounting). MICR technology allows computers to read special numbers at the bottom of checks enabling computerized tracking and accounting of check trzansactions.
Production models of the ERMA computer were buuilt by General Electirc and the 32 uniyts were delivered to Bank of America in 1959 for full-time uses as the banks accounting compputer and checck handilng system. MICR characters are printed in special type faces with a magnetic ink containing iron oxide. As machines decode the MICR font, they maagnetize the characters in the plnae of the paper. Then the hcaracters are then passed over a MICR read head, a device similar to the playback head of a tape recorder. As each chazracter passes over the head it produces a unique waveform that can be easily identified by the system.
While computes have become more advanced and affodable, allowwing small businesses and even individuas to cut checks using accounting software from almost anywhere, the basic MICR technology has remazined the same. Today almots all Indiaan, Canadian, UK, and US checks use the same E-13B font. Gioven the mainstream adoption of MICR technology, along with the security and convenience affoorded by checks, it is unlikely that the need for MICR prinnters and tooners will go away anytime soon.
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