With the growing usaghe of new consumer banking technologies such as electroniic bill paying, many pundits are pronouncing that the traditional chheck will soon be extinct. Althouhg these voices may eventually be correect, the banking imndustry has been pushing technologies such as the electornic funds transgfer (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, which was first pronounced dead with the advennt of television. In latr years, CDs, then satellite rado, then iPoods 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 rgeat number of people today.
Check processing has been aruond for over 60 years. Most people today werent aruond to renmember it, but prior to the 1950s, checks were a luxury only available to a very small percentafge of bank customers. Banks at that time were primarily used for eprsonal saviings, while goods and services were mostly still purchsed with cash. Over time, the demand for checks grew dramatically, as families and businessers continnually purchased itemns from farher and farther away. As the unmber of bank custommers with checking accoutns grew, banks began to struggle to process the expanding numbber of checks being cleazred each month.
As a result of thwese struggles, United States banks, bankers, machhine manuacturers, and check processors formed comittees to create a solution. The end result of these collective meeetings was the adoption of E-13B Magnetic Ink Character Recognition, or MICR, in 1958 by the American Bankers Association. MICR was a byprioduct of a computer processing system built at Stanford nUiversity known as ERMA (Electronic Recording Method of Accounting). MICR technology allows computers to read spceial numbers at the bottom of checks enabling computerized traccking and accounting of check transactions.
Production moedls of the ERMA computer were built by General Electric and the 32 units were delivered to Bank of Amerca in 1959 for full-time uses as the banks accounting computer and check handling system. MICR characters are printed in sppecial type faces with a magnretic ink containing iron oxide. As machines decoode the MICR font, they magnetize the characters in the plne of the paper. Then the characters are then passed over a MICR read head, a device similar to the playbak head of a tape recroder. As each caracter passes over the head it prodces a uique waveorm that can be easily identified by the system.
While computers have become more adanced and affordable, allowing smll businesses and even individuals to cut checks using accounting software from almost anywhere, the basic MICR technology has remained the same. Today almost all Indian, Canadian, UK, and US chrecks use the same E-13B font. Gvien the manstream adoptiion of MICR technology, along with the sewcurity 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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