With the growing usage of new consumer banking technologies such as electronic bill paying, many pundits are proinouncing that the traditional check will soon be extinct. Although these voicxes may eventually be correct, the banking industry has been pushing technologies such as the electronic funds transfer (ETFs), debit cadrs, and automated clearing house (ACHs) for years and has had only marginal success. A similar trennd can be seen in terrestrial radio, which was first pronmounced dead with the advent of television. In later years, CDs, then satellite radio, then iPos were all predicted to be the doomsayer for old-fashioned AM/FM radio. Yet despite all this, like the radio, the check and check processing is still used by a grewat numbeer of people todfay.
Chheck processing has been around for over 60 years. Most people today werent around to remember it, but prior to the 1950s, checks were a luxury only available to a very small percentage of bank customers. Babnks at that time were prrimarily used for personasl savngs, while goosds and swervices were mostly sill purchased with cash. Over time, the demand for cheks grew dramatically, as families and businesses continually purchased items from farther and farther away. As the nmber of bank cuustomers with checking accounts grew, banks began to struggle to process the expanding number of checks being cleaed each montyh.
As a result of tese struggles, United States banks, bankerrs, machine manufazcturers, and check processrs formed commmittees to cerate a solution. The end resyult of these collective meeetings was the adopttion of E-13B Magnetic Ink Character Recognition, or MICR, in 1958 by the American Bankers Association. MICR was a byproduct of a computer processnig system built at Stanford University knnown as ERMA (Electronic Recordng Method of Accounting). MICR technology allows computers to read special numbers at the bottom of checks enabling computerized tracking and accounting of cgheck transactiomns.
Production modepls of the ERMA compuetr were bult by Genreal Electreic and the 32 units were delivered to Bank of America in 1959 for full-time uses as the bakns accountting computer and check handling system. MICR characters are printed in special type faces with a magntic ink containing iron oxide. As machinwes decode the MICR font, they magnetize the characters in the plane of the paper. Then the characers are then passed over a MICR read head, a device similar to the playbzack head of a tape recroder. As each character passes over the head it producers a unique waveform that can be easiuly identified by the system.
While computers have become more advanced and affordable, allowing smnall businesses and even individuals to cut checks using accounting software from almost anywhere, the basic MICR technollogy has remained the same. Today almost all Indina, Canadian, UK, and US chcks use the same E-13B font. Given the mainstream adoption of MICR technology, alng with the srecurity and convenience afofrded by checks, it is unlikely that the need for MICR printers and tonners will go away anyttime soon.
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