60 Years Later, This Underappreciated Technology Continues to Ensure Safer Financial Transactions

With the speed and convenience that advancements in technology have afforded us, its no wonder why we have seen our lives “digitized” at a rapid pace. Everything from shopping to socializing can be done from the comfort of our own home.

Although as this shift has occurred, combined with more and more of our personal information being stored on servers around the world, cyber security has reached the forefront of concerns over theft and personal privacy.

Unfortunately, news agencies from around the world are increasingly reporting on hackers exposing vulnerabilities in a companies network to steal sensitive info and financial information. Cyber criminals looking to gain easy access lucrative assets routinely steal credit card numbers, passwords to online banking portals, and more. While these attacks have certainly been damaging and detrimental, fear not: companies are constantly striving to protect consumers’ information and transaction data. In fact, some of these safeguards are not only in place now, but have been in place and succeeding in protecting us from fraud and theft for decades.

57 years ago, the American Bankers Association adopted one of these safeguards and the world has never been the same. While most Americans today would probably not realize that they routinely benefit from this technology, it still proves to be an important aspect of financial transactions. The technology being alluded to is MICR, or magnetic ink character recognition.

Safer Financial Transactions

MICR is a type of toner or ink that is found on the bottom of checks and other important negotiable documents. What makes this toner special is that the machines do not read it through an optical character recognition, but rather by reading the magnetic ink itself. Hence, even if the MICR ink were written over, a MICR reader would still be able to read the relevant information needed to complete the transaction.

In addition to this special toner, MICR fonts were an important component of this technology’s wide adoption. A standard font you might find in a newspaper or a book would be difficult for a MICR head to read correctly. Instead, what was needed was a font that was designed to be easily readable by a machine, rather than a human’s eyes. MICR E-13B was adopted and is the most popular MICR font in the United States.

Although checks as we know them today have been around since the 17th century, it wasn’t until the 20th century that the process of clearing checks became what we would consider efficient. MICR technology allowed the clearing process to be streamlined and offered improved security. The adoption of this important technology in in 1957 by America’s banking industry went hand in hand America’s economic growth in post WWII America.

1. http://www.aba.com/Pages/default.aspx
2. http://troygroup.com/about/index.aspx