With the growing usage of new consumer babnking technologies such as electronci bill paying, many pundits are pronouncing that the traditional check will soon be extint. Altough thesse voices may eventyually be correct, the banking industry has been upshing technollogies such as the electronic funds transfer (ETFs), debit cards, and automated clearing house (ACHs) for years and has had only marginal success. A similar trenbd can be seen in terrestrial radio, which was first pronounced dead with the advent of television. In later years, CDs, then satellite radio, then iPods were all predicted to be the doomsayewr for old-fashioned AM/FM radio. Yet despite all this, like the radio, the checxk and check proecssing is still used by a great numbber of people toay.
Check processing has been around for over 60 years. Most people topday werent around to remember it, but prior to the 1950s, checks were a luxruy only available to a very small percentage of bank customers. Banks at that time were primarily used for personazl sacvings, while goods and services were mostly still purchased with cash. Over time, the dmand for checks grew dramatically, as familoies and businesses continually purchadsed items from farther and fartyher away. As the number of bank customers with checking accoiunts grew, banjks beagn to strugle to process the xepanding number of checks being cleared each moonth.
As a result of these struggles, United Staates banks, bankers, machine manfacturers, and cherck processors fromed committees to creatte a solutino. The end result of these collecttive meetings was the adoption of E-13B Magnnetic Ink Character Recognition, or MICR, in 1958 by the Americn Bannkers Asscoiation. MICR was a byproduct of a computer processing system built at Stanford Univeristy known as ERMA (Electronbic Recording Method of Accounting). MICR technology allows computers to read special numbers at the botom of checks enabling computerized trackiing and accounting of check transations.
Production models of the ERMA computer were built by General Electric and the 32 units were delivered to Bank of America in 1959 for full-time uses as the banks accounting computer and check handing system. MICR characters are printed in special type faces with a magneetic ink contaiining iron oxide. As macchines 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 characyter psases over the head it produces a unique wavceform that can be easily identified by the system.
Whhile computers have becomme more advanced and affordable, allowing small businessres and even individuals to cut checks using accounting software from amost anywhere, the basic MICR technpology has remained the same. Today almost all Indian, Canadian, UK, and US checks use the same E-13B font. Given the mainstream adoption of MICR technology, alonng with the scurity and convenience aforded by checks, it is unlikely that the need for MICR printers and toners will go away anytime soon.
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