Why is the MICR Line Required on Checks?

While overall check use has declined over the past 10 years, business-to-business check payments are still going strong, and even increasing in value.

MICR & Check Clearing in the 21st Century

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

So what is the MICR line used for? 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 (Check 21). 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.

Why the MICR Code is Required

In more recent years, there have been questions in the industry about the need for the magnetic ink on checks. Some may think it’s cost-effective to avoid printing checks with the more expensive magnetic ink. However, the magnetic ink has always been legally required on the check as a payment instrument and that requirement still exists today. According to the Federal Reserve and the Accredited Standards Committee X9 (for financial industry standards), in order for a check to be treated as a cash item, it must contain MICR.

Our MICR 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 is critical your business complies with the standards. Contact us today to learn how our MICR check printer solutions and MICR toner cartridges offer your business the most security available today.

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