As we know cheques have long served as a major source of transactions in financial institutions.
In this race of digital technology, people are quite familiar with the term MICR when it comes to check processing.
But there is not much information about exactly what is MICR? what is the MICR full form? and how this technique ensures secure and efficient financial transactions.
In this article, I will tell you what MICR is, and how it works.
So stay with us and read this article completely so that you can become completely familiar with it.
So let us first know what is this technology.
Table of Contents
What is MICR?
“Magnetic ink character recognition” is a technology used to facilitate the processing of cheques and other financial documents.
It has an ink printing of magnetic characters that can be easily processed by high speed integrated MICR readers. These characters are machine readable and can be easily processed by high-speed readers machine.
By using this technology banks and major financial institutions are able to process large amounts of cheques efficiently and accurately, reducing the chance of errors and speeding up overall processing time.
In today’s modern and fast service banking system this technology has been widely adopted and continues play a significant role in check processing in various financial institutions.
What is MICR full form?
‘MICR’ is an acronym and its full form is Magnetic Ink Character Recognition. It is a technology which is mainly used by banks or any financial institution to process cheques on a large scale.
Instead of the traditional check processing process, it uses a specially formulated magnetic ink that contains iron oxide. These iron oxide printed texts can be easily read and processed by a reader machine.
How does it work?
It uses a unique font called MICR E-13B. This font includes numbers (0 to 9) and some special symbols such as the dollar sign ($) and the on-us symbol (Ⓞ).
Each letter is printed using a distinctive pattern of magnetic ink that can be easily recognized and interpreted by MICR readers.
MICR codes are generally printed on the bottom of Cheques and other financial documents. These codes contain important information like the bank’s routing number/account number as well as the check number.
When a Cheque is processed, the MICR reader scans the MICR code and gathers the necessary information to complete further processing.
Components of MICR?
“Magnetic Ink Character Recognition” technology uses a unique combination of font and magnetic ink to ensure accurate and efficient data capture. The components used in MICR are given below:
1. MICR Line: It is a group of letters printed at the bottom of the cheque. It generally contains the bank’s routing number, customer’s account number and check number and this line is printed using magnetic ink and is essential for accurate and efficient check processing.
2. Special Characters: Characters used in encoding are different from regular alphanumeric characters. These letters are specially designed for magnetic readability and include the digits 0 to 9 and four special symbols: the transit symbol, the on-us symbol, the zodiac symbol, and the dash symbol.
3. Magnetic ink: It relies on a specially formulated magnetic ink that contains iron oxide particles. If you read this content seems to be as if it was written by a human.
This ink is tamper resistant and can be easily detected by magnetic sensors. Letters printed using this special ink are capable of being magnetic, which allows for automatic reading and processing.
4. MICR Reader: Readers are devices used to scan and decode characters on a MICR line.
Reader machines have a powerful sensor to detect that magnetic ink, and uses special algorithms to translate the magnetic patterns into readable text.
Readers are commonly found in banks, ATMs, and check processing centers.
5. Reader-Sorter Machine: It is a device used by banks to process cheques. It reads the check letters and sorts them based on the information encoded in the MICR line.
6. Toner/Ink Cartridge: Toner or ink cartridge is used in the printer to print the characters on the cheque. It is a special ink for printing text on a cheque.
7. MICR Software: To process the data efficiently, dedicated software is used. Thiey are specifically designed to interpret and verify information, ensuring its accuracy and integrity.
They are highly able to handle various data processing tasks, For example data sorting, encoding, and validation.
8. Check Scanner: This equipment is used to capture images of Cheques for digital processing. Some check scanners are equipped with MICR reading capabilities,
which allow them to read the characters on a check and extract relevant information for further processing.
Benefits of MICR
The primary use of this technology is the processing of cheques. When a check is issued, essential information, such as the bank’s routing number, account number, and check number, is encoded using characters on the bottom of the check.
This encoding is automatic sorting, reading and verification during the check-clearing process.
It keeps a strong security layer to secure the financial documents which makes it harder to counterfeit Cheques, resulting in reduced potential risk of fraudulent activities.
“Magnetic Ink Character Recognition” is a technology used by banks in check processing systems. By printing account and routing number verification information using a special magnetic ink and font, the data is made much easier to automatically read and execute by high-speed reader-sorter machines.
This enables a faster resulting and more efficient sorting and processing of large quantities of Cheques in banks on a daily basis.
This has significantly reduced the manual effort and increased the security of the check clearing process. Perhaps without this, it would not have been possible for paper check processing to be as streamlined on a large scale.
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