What is MICR?

What is MICR? It’s those mysterious, funny characters at the bottom of a check, sometimes referred
to as the MICR line. These characters are the key by which all checks are automatically processed
in the United States today. This automated process is based on a technology called Magnetic Ink
Character Recognition or MICR. As the name indicates, this technology uses magnetic reading to
identify these unique numbers and characters. Currently, the United States processes over 65 billion
checks and other financial documents per year based on the details of this MICR line.

MICR technology was developed in the mid-1950s to address the volume of checks that were being
processed manually. The goal was to accelerate the check routing process to route the check back
to the location where the funds exist and to settle the transfer of funds as soon as possible.

To address this problem, a group of individuals from the American Bankers Association and
Stanford University developed a set of 14 unique characters called E13B MICR fonts. These fonts
are printed with magnetic ink or toner that when magnetized, will emit a magnetic signal that
identifies each unique character. What do the characters mean? The digits 0-9 are self-explanatory.
However, the E13B fonts have four special symbols with the following meanings:

Why Magnetic Ink?

MICR documents are processed within the banking industry on special reader/sorter machines. The
reader/sorters will first magnetize the MICR line, and then read the magnetic signals. Each character, if printed correctly and with the appropriate amount of ferrous oxide in the ink or toner,
will give off a magnetic signal unique and identifiable to that character.

The magnetic signal’s shape is developed from two key elements:

• The character shape - the character’s horizontal and vertical attributes
• The magnetic content - the amount and distribution of magnetic material in the ink

If the shape and/or magnetics of the characters do not meet specified standards, the reader/sorter
will reject the check. The rejected check will then require manual handling which will delay the
automated process. Today’s processing industry has an average reject rate of approximately 1.2%
of all checks. That results in over 700 million dollars the banking industry pays for rejected checks.

What About Fraud?

With a simple signature, preprinted checks become legal tender. According to the Federal Reserve
Board study, check fraud is a problem that will cost U.S. businesses and banks approximately 20 billion this year alone.

Who is ANSI?

How do you make sure you are meeting the specific MICR standards? American National Standards
Institute (ANSI) serves in its capacity as administrator and coordinator of the United States private
sector voluntary standardization system. The Institute is a nonprofit membership organization
supported by a diverse constituency of private and public sector organizations. During your vendor
selection process make sure your MICR solutions provider is ANSI compliant.

Altec Understands MICR Technology

All of Altec’s MICR products, from paper check printing to software related solutions are ANSI compliant and guaranteed compatible to your software output. Altec stays abreast of the latest antifraud and security features to help ensure documents security. Look to Altec for all your
disbursement needs!

For more information, please contact micrsales@altec-inc.com.