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Checking Account Routing Number

A checking account routing number is an identification number that is associated with individual banks. It contains nine digits and allows a bank to accept or send funds either to or from a checking account or a savings account. The first four digits of the checking account routing number identify the district of the Federal Reserve Bank for the banking institution. The second set of four digits identify the actual bank. The last digit of the routing number can be used to help categorize the account. The individual checking account number in addition to the routing number identifies the specific individual who owns the interest bearing account.

There are a handful of reasons you may need the routing or account number. For one, the routing digits help you to establish a direct relationship between your boss and your bank; meaning, for direct deposit of your pay into your bank or for a transfer of money. You may be wondering why they still use a routing number, or why a checking account routing number was devised in the first place. In a time when payments were not cleared electronically and nearly instantaneously, the handling of a check was far different.

When History Makes Cents

It may be that you forget that there used to be a lag between when you made a payment from your checking to the grocery store. It may have taken days or even one full week for the payment to clear. The reason for the delay was not just that older methods took more care and time for the banking staff and tellers to work through payments. Yes, they processed payments partially by hand. Though, it was encrypted mechanically with special ink and such.

Despite having even this much mechanical encryption that allowed a magnetic ink character reader (MICR) machine to read the old paper payment methods from checking products, they still had to travel a great deal. The reason that the checking account routing number includes, for instance, the local district of the Federal Reserve Bank, was initially to actually perform checking processing. The sorting process took people's payments on a nice journey back to the bank of origin. This is how people were able to receive the actual checking paperwork back at the end of every month.

Fast forward to the mid-1990s and people had started using debit cards, ATM machines, and credit cards with increasing frequency. Of course, the debit card made the greatest impact on the industry. In response, the Federal Reserve actually responded by drastically decreasing the processing centers to nearly nil, down from a dizzying array of centers nationwide throughout the years. In 2002, banks started electronically copying the MICR information and making an image of the checking account routing number and the like to process payments and accept deposits. They would perform the payment processing through the automated clearinghouse, or ACH payment.

This one step in the long history of routing digits changed the system from a declining paper-based one to an increasingly electronic system. By October 2004, the Federal Reserve Bank made the leap to the newest system, called the 21st Century Act. Banks basically treat all payments as electronic, even when a full piece of paper with the checking account routing number is presented. You may notice that even if you deposit at an ATM, you will be given a receipt with just an image, but not be offered the original.

Changing Times and Payment Methods

While the checking account routing number still exists, it may not be something that is going to be in full view when you make payments in the present and the future. The declining usage and increasing reliance upon electronic payments was partly driven by security concerns. Especially since the advent of printing paper payment from home, fraud and stolen identities became a big problem. The checking account routing number of course made it too easy for people to steal each others banking information.

Of course the security and protection of those individuals conducting their banking with debit cards is still under scrutiny, as many people every year continue to be victims of different forms of theft. It seems that as long as money is involved, people will always be devising ways to steal it. It makes sense, then, to keep up to date on any news and information about the banking industry with regard to personal security. A checking account routing number contains a lot of personal information that identifies you, your bank, and also the Federal Reserve Bank district in which the bank is located. Most of this information is essentially processed electronically now, and thus makes it unnecessary to carry around anything but a debit card. If you are one of the few who likes writing out payments at the grocery store, then keep safe.