Routing number is needed and can be said is a must while sending or receiving money banks and other financial institutions as well as credit unions.
What is a routing number?
A routing number is a 9-digit number allotted to a bank, credit associations or any type of financial institutions. This helps to send and to receive funds from other budgetary foundations. The routing number figures out where your record of account was opened. Routing number is also called ABA number or American Bankers Association number. Another name of routing number is routing transit number.
Instead of carefully going through checks to discover your bank’s name and conceivably confounding it with a bank of another name, routing numbers help bank staff and the machines that currently procedure checks to know precisely where cash should go. By using that method, checks proposed for Bank of America and American Bank never go to the wrong spot accidentally. This is one major advantage of routing number.
It is a fact that a bank will have several routing numbers, and it is contingent upon things like the area where account is opened or for any other important mission of routing number is utilized for. However it is to be understood that no two banks will ever have the equivalent routing number.
What are the usages of routing number?
To be noted, routing number can be used for several tasks on a daily basis.
- Depositing directly.
- Bill payments in an automatic manner.
- Processing of checks.
- Wire transfers.
How can we identify Routing number on a check?
The process is very simple. The routing number inscribed on a check is actually a part of MICR which is otherwise known as Magnetic Ink Character Recognition along with the account number.
Is bank routing number to kept secret?
According to John Smith, the famous economist and product development head at online check writer, Routing number is something that should not be kept secret as your account number. Instead it is to be known to the customers and should be accessible at any point of time. It is seen that almost all the responsible banks display routing number on their website itself as it is much needed factor while writing a check or receiving a check.
One thing that should be kept in mind is not to display or reveal account number along with routing number as it may become an easy path to access to another customer’s account. However it will be highly appreciated if routing number of a particular bank is made available on the website of the banks. Another aspect that should be candid is regarding the correct routing number or else everything related to check submission and en cashing may go wrong.
History of routing number
History of routing number turns back to around a century back, to be specific in the year 1910.This was created by American Banking Association (ABA). The main aim behind this procedure was to transform the check processing exercise more smooth, rapid and error free. Just to remember that computers were not invented at that time.
The process of developing routing number was to uniquely recognize the bank which is paying. This can be put in other words that it was the responsibility of the bank who wants to honor the checks. For this entire process to be fool proof and secure, development of an identification number was the only idea and hence routing number came into existence. The routing number really assisted a person taking a check to ensure that they would really obtain the funds the check guaranteed from the payer’s bank.
Then subsequent to the introduction of the Federal Reserve, which carried out a significant role in the payment processing methods, things got added to the same. In actual fact, “Federal Reserve routing symbol” as it is known in the current financial scenario because a Federal Reserve number got attached to the routing number. This aids to understand the type of financial institution and also about the Federal Reserve district where the account was actually opened.
Routing number gave check processing new dimensions
The numbers would proceed to be utilized in electronic check-trading systems beginning in for spendable currency the 1960s, which extraordinarily accelerated check organizing. The section of the Check 21 Act, and the capacity of banks to make electronic duplicates of checks for transportation, as opposed to sending paper duplicates, has made handling practically immediate and really easy to operate.
In fact when a customer writes a check, there is a possibility that the particular cash has already debited from the bank or we can say that it is distantly confirmed. The movement of these checks was made to the banks and the customers and they realized that the checks are moving in immense speed.
You can see your full record number and routing number when you sign in to Online Banking systems. You’ll discover a connection in the “I’d like to” list on your checking account transactions page. There are two numbers you’ll have to give. There will be a nine digit number digit code which is also known as routing number. It is actually the primary set of numbers that are printed on the bottom side of every check that too on the left side.
Your account number (for the most will possess 10-12 digits) is precise to your own account. It’s the second arrangement of numbers imprinted on the base of your checks, just to one side of the bank routing number. You can likewise discover your account number on your month to month statement sent to you by banks.
in short,routing number helps a customer as well as the bank to identify a particular detail of the check which includes the bank,from were the account number was opened etc.