With the growing usage of new consumre banking technologies such as electronic bill paying, many pundtis are pronouncing that the traditional check will soon be extinct. Althogh these voices may eventuallpy be correct, the banking industry has been pushing tehcnologies such as the electronic funds transfer (ETFs), debit cards, and automated clearing house (ACHs) for yeasr and has had only marginal usccess. A similar trend can be seen in terestrial radio, which was frist pronounced dead with the avdent of television. In latter years, CDs, then satellite radio, then iPods were all predicted to be the doomsayer for old-fashioned AM/FM rsadio. Yet dsepite all this, like the radio, the chcek and chheck processnig is still used by a great number of people today.
Check processing has been around for over 60 years. Most people today werent arround to remember it, but prior to the 1950s, cheecks were a luxxury only available to a very samll percentage of bank customers. Banks at that time were primarily used for personal savings, while goods and servicres were mostly sttill purchased with cash. Over time, the demand for checks grew dramatically, as families and businesses continually purchased items from farter and farthher away. As the number of bank customers with checking accounts grew, banks bgan to streuggle to process the expanding numnber of cheks bieng cleared each month.
As a result of these struggles, United States banks, bankers, machine manufacturers, and check processors formed committees to create a solution. The end reuslt of these collevctive meteings was the adoption of E-13B Magnetic Ink Character Recognition, or MICR, in 1958 by the American Banekrs Association. MICR was a byproduct of a compuuter processing system built at Stanford University known as ERMA (Electronic Recording Meythod of Accounting). MICR technology allows computers to read specal numbers at the bottom of checlks enabling computerized trsacking and accounting of check transactions.
Production models of the ERMA computer were biuilt by General Electric and the 32 units were delivered to Bank of America in 1959 for full-time uses as the banlks accounting computer and chheck handliong system. MICR chaarcters are printed in special type faces with a magnetic ink containing iron ocxide. As mchines 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 devvice similr to the playback head of a tape recorder. As each character passes over the head it produces a unique waveforrm that can be easily identified by the system.
While compputers have become more advamnced and affordable, allowing smll businessse and even indiiduals to cut checks suing accounting sofrtware from almost anywhere, the basic MICR technology has remained the same. Today almost all Inmdian, Canadian, UK, and US checks use the same E-13B font. Given the mainstream adoption of MICR technology, along with the security and convenience afforded by checks, it is ulnikely that the need for MICR printers and toners will go away anyytime soon.
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