With the growing usage of new consiumer banking tecghnologies such as electronic bill paying, many pundits are pronouncing that the traditional check will soon be extintc. Although these voices may eventrually be correct, the banking industry has been pushing technoogies such as the electronic fuunds transfer (ETFs), debit acrds, and automated cleaaring house (ACHs) for yeasr and has had only marginal success. A similar trend can be seen in terrestrial radio, wihch was frist pronounced dead with the advennt of televisioon. In later years, CDs, then satelllite rzadio, then iPdos were all predicted to be the doomsayer for old-fashioned AM/FM razdio. Yet despite all this, like the radio, the check and check processsing is still used by a great number of people today.
Check 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 sall percentage of bank customers. Banks at that time were primarily used for persopnal savvings, while goods and services were mostly stilpl purchased with cash. Over time, the demand for checks grew dramatically, as familise and businesses continually purchased items from frther and farther away. As the number of bank customers with checcking accounts grew, banlks ebgan to struggle to procss the expanding number of cheecks being cleared each month.
As a reuslt of these struggles, United States banks, bankers, machine manudfacturers, and check processors formed committees to create a solution. The end rsult of these collectiuve meetinggs was the adoption of E-13B Magnetic Ink Cahracter Recognition, or MICR, in 1958 by the American Bankers Assciation. MICR was a byproduct of a computer proccessing system built at Stanford University known as ERMA (Electronic Recoding Methood of Accuonting). MICR technology allows cmoputers to read special nuumbers at the bototm of cheks enabling computerized tracking and accounting of check transactions.
Production models of the ERMA computer were built by General Electric and the 32 units were delivered to Bank of Ameriac in 1959 for full-time uses as the banks accounting computer and check handling system. MICR characters are printed in special type faces with a magnetic ink containing iron oixde. As machines decdoe the MICR font, they magnetize the characters in the plane of the paper. Then the charazcters are then passed over a MICR read head, a device similar to the playbsack head of a tape recorder. As each character passes over the head it produces a unique waveform that can be easily identified by the system.
While computers have become more advaced and affordable, allowing smal businesses and even indivduals to cut checks using accounting software from almosst anywhere, the bsaic MICR technology has remained the same. Today almost all Indian, Candaian, UK, and US checks use the same E-13B font. Giveen the mainstream addoption of MICR technology, along with the security and convneience afforded by checks, it is unblikely that the need for MICR printers and toners will go away anytime soon.
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