MICR Code (Magnetic Ink Character Recognition)

A MICR code is the line of characters printed along the bottom edge of a cheque using magnetic ink and a special typeface, so that it can be read accurately by machines. MICR stands for magnetic ink character recognition. The line identifies the bank and branch on which the cheque is drawn, the customer's account and the serial number of the cheque, and in some countries it later carries the amount as well. Reader-sorter machines use this information to route cheques through clearing quickly and with very few errors.

MICR technology was developed in the 1950s, led by American banks and the Stanford Research Institute working with industry, to cope with the rapid growth in cheque volumes. It remains in use wherever cheques are still written, including the United States, Canada, the United Kingdom and India, and the MICR line is also captured when cheques are cleared as images. In India the phrase "MICR code" usually refers specifically to the nine-digit number identifying a bank branch, which also appears on cheque books and bank statements.

The characters are printed with ink or toner containing iron oxide. When a cheque passes through a reader, the characters are magnetised and the reader detects the distinctive waveform each shape produces. Because the reading relies on magnetism rather than appearance, it still works if the cheque has been stamped, signed over or marked with ordinary ink. Modern readers combine magnetic and optical recognition to improve accuracy.

Two typefaces are standardised internationally:

• E-13B. Fourteen characters, the digits 0 to 9 plus four special symbols that mark field boundaries. It is used in the United States, Canada, the United Kingdom, India, Australia and many other countries.
• CMC-7. A barcode-like font of vertical strokes that includes letters as well as digits. It is used in France, other parts of continental Europe and much of Latin America.

Printing standards specify the exact position of the line, the character sizes and the magnetic strength, and banks test cheque printers to make sure their output can be read reliably.

The layout of the line depends on national cheque standards:

• United States. The line contains the nine-digit routing transit number, also called the ABA number, between transit symbols, followed by the account number and the cheque number. The amount is added by the bank where the cheque is first deposited, a step known as encoding.
• Canada. The line includes the cheque number, the five-digit transit number and three-digit institution number that together form the Canadian transit number, and the account number.
• United Kingdom. The line shows the cheque serial number, the six-digit sort code and the eight-digit account number.
• India. The nine-digit MICR code identifies the city, the bank and the branch, three digits each, and appears alongside the cheque number and account details. It is separate from the IFSC code used for electronic transfers.

In paper-based clearing, sorter machines read the MICR line on each cheque and divide cheques into bundles by paying bank, which are then exchanged through a clearing house. The paying bank reads the line again to post the cheque to the right account. Accurate MICR data meant that cheques could be processed at thousands per minute, one of the earliest large-scale automations in banking.

Most countries have since moved to image-based clearing, in which the cheque is scanned and the image and MICR data travel electronically instead of the paper. In the United States this was enabled by the Check 21 Act of 2003, which gave a printed substitute check, containing a copy of the original MICR line, the same legal standing as the original. The United Kingdom moved to image clearing in the late 2010s. MICR data is also used when cheques are converted into electronic debits through electronic check conversion.

The magnetic line is a basic security feature, since cheques printed on ordinary office printers without magnetic toner may be rejected by readers. However, MICR toner is widely available, so it does not stop counterfeiting on its own. Fraudsters can print fake cheques with valid routing and account numbers taken from genuine ones, or alter details through check washing. Banks therefore combine MICR checks with positive pay services, image analysis, signature checks and watermarks and other paper security features. Errors in the MICR line can also cause cheques to be misrouted or returned, which is why banks reject cheques with damaged or poorly printed lines and correct them by hand or with a repair strip.