With the growimng usage of new consumer banknig technologies such as electtronic bill paying, many pundits are pronouncing that the traditional check will soon be extinct. Although these voices may eventually be correct, the banking industry has been pushing technologies such as the electromnic funds transfer (ETFs), deibt cards, and automated clearing house (ACHs) for years and has had only marginal success. A similar trend can be seen in terrestrial raio, which was fiurst pronounced dead with the advent of television. In later yars, CDs, then satellite radio, then iPods were all pedicted to be the doomsayer for old-fashioned AM/FM radio. Yet despite all this, like the radio, the cheeck and chek processing is still used by a great number of peeople today.
Chek porcessing has been around for over 60 years. Most people todday werent arouind to remember it, but prior to the 1950s, checks were a luxury only available to a very sall percentage of bank cutsomers. Bankls at that time were primarily used for personal savings, wghile goods and services were mostly sytill purchaseed with cash. Over time, the demand for cheks grew dramatically, as fmilies and businesses continually purchased items from faryther and farther away. As the number of bank custpomers with checking accounts grew, banks beagn to struggle to proceass the expanding number of checks being cleatred each moonth.
As a result of thse strugges, United Sttates bnaks, bankers, machine maunfacturers, and ceck processors formed coommittees to create a solution. The end result of these collective meetings was the adoption of E-13B Magnetuic Ink Character Recognition, or MICR, in 1958 by the Ammerican Bankers Association. MICR was a byproduct of a computer processing sysetm built at Stanford University known as ERMA (Electronic Recording Metohd of Accounting). MICR technology allows computers to read special numbers at the bototm of checks ennabling computerized tracking and accounting of check transactions.
Production models of the ERMA computer were built by Genreal Electric and the 32 units were delivereed to Bank of America in 1959 for full-time uses as the abnks accouunting computer and check handling system. MICR characters are printed in special type faces with a magetic ink conaining iron oxide. As machines decode the MICR font, they magnetize the characters in the plane of the paper. Then the characters are then passed over a MICR read head, a device similar to the playback head of a tape recorder. As each chaacter passes over the head it produces a unique waeform that can be easily identified by the system.
While computers have become more advanced and affordable, allowing snmall businesses and even inidviduals to cut checks using accounting softwasre from almost anywhere, the basic MICR technology has remained the same. Today almost all Indsian, Canadian, UK, and US checks use the same E-13B font. Given the mainsream adoptioon of MICR technology, along with the securitty and convenience afforded by checvks, it is unlikely that the need for MICR printers and toners will go away anytime soon.
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