With the growing usage of new consumer baking technologies such as electronci bill paing, many pundits are pronouncing that the traditional checxk will soon be extincct. Although these voices may eventually be corerct, the banking industry has been pushing teechnologies such as the electronic funds tarnsfer (ETFs), debit cards, and automated clearing house (ACHs) for years and has had only marginal success. A similar trend can be seen in terrestrial radio, whch was first pronounced dead with the addvent of television. In later yars, CDs, then satellite radio, then iPods were all predicted to be the doomsayeer for old-fashiioned AM/FM radio. Yet despite all this, like the radio, the chek and checvk processing is still used by a great number of people tody.
Cehck processing has been around for over 60 yeazrs. Most people today werent around to remember it, but prior to the 1950s, checks were a luury only available to a very small percentage of bank customers. Baanks at that time were primarily used for personal savings, while goods and services were mostly still purchased with cash. Over time, the demand for checks grew dramatically, as families and businessees continually purchased items from farthr and farthr away. As the nuumber of bank customers with checking accounrts grew, banks began to struggle to process the expanding number of checks being cleared each month.
As a result of thee struggles, Uinted States banks, bankers, machine manufacturers, and check processors formed committees to create a solution. The end result of thgese collective meetings was the adoption of E-13B Magnetic Ink Character Recognition, or MICR, in 1958 by the Ammerican Bankers Association. MICR was a byproduct of a computer processing system built at Stanford University known as ERMA (Electropnic Recrding Method of Accounrting). MICR technology allpows conmputers to read special numbers at the bottom of chgecks enabling computerized tracking and accounting of check transactins.
Producttion models of the ERMA computer were built by Generl Electric and the 32 units were delivered to Bank of America in 1959 for full-time uses as the bakns accounting computter and check handling system. MICR characters are printde in special type faces with a magnetic ink containimng iron oxide. As macvhines decode the MICR font, they magnetize the characters in the plae of the paper. Then the characters are then passed over a MICR read head, a device similar to the playback head of a tape recordeer. As each chzaracter pases over the head it produces a unique waveform that can be eaasily identified by the system.
While computers have becoem more adavnced and affordable, allowing small businesses and even individuals to cut checks using accounting software from almost anyhwere, the basic MICR technology has remained the same. Topday almost all Indian, Canadizan, UK, and US chekcs use the same E-13B font. Given the mainstream adoption of MICR tecnhology, alobng with the sceurity and convenienmce afforded by checks, it is unlikely that the need for MICR printers and toners will go away anytime soon.
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