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What is MICR, Why Is It Important

If you are working with a reputable check printing company, you may hear them bring up MICR every now and then. This is a type of technology that can help to reduce fraud and improve financial security. To see if it is necessary for your business, learn a little more about how it works.

What Is MICR Technology?

This phrase stands for “magnetic ink character recognition.” It refers to a special process that involves printing with magnetic ink. This ink allows machines to easily recognize and process the check. At the same time, the printed numbers are clear and legible enough for a human to read.

If you have ever seen a check with a string of numbers written in an odd, square font, then you have seen magnetic ink numbers. Usually, these numbers appear at the bottom of a check, but they can also show up somewhere along the left side. Three different types of important information show up in the number. The numbers will include the bank’s nine-digit routing number, the 12-digit account number, and the four-digit check number from left to right.

When discussing these numbers, most people automatically think of checks. However, keep in mind that checks are not the only application for magnetic ink character recognition. This technology can also be used for coupons, credit card invoices, mail, and other similar items. Any time you have a document that you want a computer to read, magnetic ink may help.

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How Does MICR Work?

MICR technology has a valuable role in banking. It allows a computer to quickly scan the check and enter the information into records, even if the computer does not have sophisticated visual identification software. The key to this technology is magnetic ink.

The magnetic ink number line must come from a printer equipped with magnetic ink or toner to be effective. Other machines can then read the subtle magnetic traces in the ink. When a computer scans a check with magnetic ink, it can make out the numbers even if signatures, bank stamps, or other marks have covered up the characters.

In addition to the magnetic ink, this special security feature also uses a specific font. In North America and the United Kingdom, the E-13B font is most common. In South America and Europe, institutions use the CMC-7 font.[2] This font has special squares and emphasized lines that make it easier for a computer to orient the text. The font is readable by a computer while still legible enough for a human to get information from the markings.

Will MICR Help to Reduce Fraud?

Since this technology helps computers to read checks, it might not seem directly related to fraud prevention. However, the reality is that it plays a huge role in helping companies to reduce fraud. First of all, it makes it much harder to photocopy a check. Since banks process a check by running the magnetic ink number through their computer, a check without a readable number will instantly be flagged.[1]

Furthermore, the number helps to provide a secondary means of account number verification. If a fraudster alters the check by changing a one to an eight, the MICR technology will still display the correct number when the bank scans the check. This prevents anyone from altering the account that the check provides funds from.

The final way that this technology reduces fraud is by making it easier to record check data. Without the ability to scan checks easily, financial institutions have to put a lot of time and effort into recordkeeping. Before magnetic ink numbers were developed, banks had to keep track of everything by hand, so accounting errors were more common. The more accurate records created by modern technology allow people to identify fraud and track down those who commit fraud more easily. 

What Are the Other Benefits of MICR Printing Checks?

Of course, the biggest benefit of this technology is that it reduces your chances of fraud, but that is not the only thing it does. Getting a printer that works with magnetic ink technology also provides you with other benefits such as:

  • Allowing you to remain compliant with national and international banking standards, so your checks can automatically be accepted at all financial institutions.
  • Reducing the need for preprinted checks, which embezzling employees can easily steal. Instead, the right check printing service can just print checks on demand.
  • Standardized numbers that make it easy to glance at a check and tell which account it is linked to
  • Faster check processing so that your employees and customers can access their funds as quickly as possible
  • Saving money because you are not dealing with bank reject fees that result from the unstandardized or fraudulent check
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How to Use This Technology for Your Check Printing

As you can see, there are all sorts of reasons to make sure your business uses checks with magnetic ink. However, adding this security feature can take a little planning. There are a few different ways to get checks with this technology. The first and simplest way is just to get a blank checkbook from your bank. All these checks will automatically be printed with magnetic ink. However, having a big stack of blank checks lying around is just asking for trouble.

Most companies that are serious about security will want to print checks on demand. The most straightforward method is to get a printer that can handle magnetic ink and make all your own checks from scratch. If you do not want to pay for a special printer, you can also order blank check stock from a check printing company, which should be able to provide you with blank pages that have the magnetic numbers pre-applied. Then, you can just run the paper through a regular office printer to add the name, amount, and other necessary information.

A final option is to work directly with a business that prints checks. Instead of printing checks yourself, you can just give the necessary information to the company, and they can print up the check and send it directly to your desired party. Setting up this system takes a little time compared to printing checks yourself, but once it is set up, it saves a lot of time and effort. The company can ensure that things like payroll and invoice payments are handled quickly and securely.

Now that you know a little more about how magnetic ink check features work, are you interested in giving it a try? If you want to maintain your company’s financial security, is here to help. We work with businesses to find a convenient and secure method of handling money. Our team can help you with printing checks, mailing funds, and sending ACH transfers. Contact us today to learn more.