Why MICR Code Is Required on Checks

Author: Source Technologies

While overall check use has declined over the past ten years, business-to-business check payments are still going strong and even increasing in value.

When handling business transactions, it is important to ensure you are using a magnetic ink character recognition (MICR) printer when printing checks. The MICR line is still essential to prevent check fraud and quickly facilitate routing information.

What Is the MICR Line on a Check?

MICR refers to the formulation of magnetic toner or ink used to print the special font at the bottom of checks. Different from regular ink or laser toner, MICR ink and toner contain magnetic iron oxide, a requirement of the Federal Reserve, making check-clearing a more efficient process.

MICR codes allow for the automated processing of checks, as magnetic ink is easily readable by machines used in the banking system. This technology reduces errors in routing and account identification, helping businesses and financial institutions avoid check fraud.

MICR Line Requirements

The MICR line typically appears at the bottom of a check and contains information such as the financial institution's routing number, the account number, and the check number.

Image of checks showing MICR Line


How Does a MICR Code Work?

Specialized MICR ink and toner enables checks and other negotiable documents to pass through high-speed readers/sorters in the check-clearing process. The machine sends a magnetic charge to the paper, and this is how it reads the routing number and account information contained within the MICR line.

When a check or other negotiable document is printed using regular non-MICR ink or toner, the reader/sorter will reject the check, resulting in a bank fee for the company that printed the document.


MICR and the Check Clearing for the 21st Century Act

The Check Clearing for the 21st Century Act (Check 21) is a U.S. federal law enacted in 2004 to facilitate the electronic processing of checks. The law allows financial institutions to create and process digital images of checks instead of physically transporting paper checks.

Before Check 21 legislation, checks required magnetic ink so that as the paper check moved through the clearing process, MICR readers/sorters could automatically “read” the account number and routing number on the check.

Today, the vast majority of checks are cleared by scanning them and using the image of the check to move through the payments system or converting them to an ACH electronic transaction.

Where the system used to rely on many scans and “reads” of the characters on a check, now the MICR read happens just once to capture the information during its transition to an electronic format.


How the MICR Line Reduces Fraud Risk and Saves Money

Benefits for Financial Institutions

When the MICR line is printed on checks and documents on demand, financial institutions eliminate the need for pre-printed checks in favor of blank check stock. Blank check stock prevents check fraud because it is “useless” until the MICR line is printed with a MICR printer. 

Equipping your financial institution with a secure MICR solution also eliminates the costs associated with pre-printed checks, such as purchasing, storing, distributing, and tracking these documents.

By printing the MICR line on-demand, financial institutions also reduce voids, missing checks, and paid unadvised charges.

Benefits for Businesses

With MICR, businesses have the option to print their own documents and official checks utilizing magnetized toner to create specialized identifiers that track a payment through the banking system.

This helps reduce costs when buying checks directly from the financial institution and provides added convenience.


Frequently Asked Questions About MICR Lines

Is MICR ink required on checks today?

In more recent years, there have been questions in the industry about the need for magnetic ink or toner on checks.

Some may think it’s cost-effective to avoid printing checks with the more expensive magnetic ink. However, MICR has always been legally required on checks as a payment instrument, and that requirement still exists today.

According to the Federal Reserve and the Accredited Standards Committee, X9 Inc. for financial industry standards, a check must contain MICR for it to be treated as a cash item.

If your business is currently printing its own checks, you must use proper MICR toner or ink to ensure they are compliant with the processing procedures of the banking system.

Where is the MICR line located on a check?

The specific placement and format of the MICR line can vary slightly, but it is generally found near the bottom of the check, either on the left or the center, depending on the check design.

Is the MICR code the same as the routing number?

The MICR code includes the routing number as one of its components, but the terms are not interchangeable.

The routing number is a broader term referring to the specific numerical identifier for a financial institution, while the MICR code is a specific format, including the routing number, used for check processing.

If your business is printing its own checks, you must use proper MICR toner or ink.


Our MICR Check Printing Solutions

At Source Technologies, we understand the regulations in place that govern the financial industry and your check printing operations. With magnetic ink required for check legitimacy, it’s critical that you comply with the standards. We’ve built our technology around the importance of the MICR line for secure and efficient check and document printing and processing. Contact us today to learn how our MICR printers and toner cartridges can benefit you.