What is the full form of MICR?

What is MICR?

MICR can be expanded as Magnetic Ink Character Recognition. The technology was invented in the 1950s so that it can be checked whether the cheques are legal or not. Besides cheques, the validity of other documents can also be checked with the help of this technology. A special ink is used in this technology which is sensitive to magnetic fields. This technology is mostly used by banks and many other financial institutions. Retailers can also use the technology to check fraud.

MICR Line

The MICR line consists of a sequence of characters which is divided into three parts −

• Bank routing number

• Account number

• Cheque number

Usage of MICR can reduce frauds as security is enhanced by using it.

Features of MICR

MICR comes with many features which are as follows −

Magnetic Ink

MICR reads the characters on the cheques and other bank documents with the help of magnetic ink. Iron oxide is used to develop the ink which is compatible with magnetic fields. Magnetic sensors in the MICR readers can easily read the characters on the cheques.

Character Recognition

Characters can be automatically recognized on a cheque if it is valid. MICR does not process the Xerox copies of cheques.

MICR Readers

MICR readers have magnetic sensors which read the characters with the help of magnetic ink. The characters on the cheques are written in special fonts so that MICR readers can read them easily.

How does MICR work?

MICR uses an ink that is sensitive to magnetic fields. It prints and MICR line on the cheques with the help of this magnetic ink or toner. The main component of this ink is iron oxide which works well with magnetic fields. This iron oxide helps computers to read the MICR number even if they are covered. MICR consists of three parts as follows −

Routing Number

Routing number is used to identify the bank from where the cheque was issued. This number consists of nine characters. Routing numbers are issued on the basis of the state to which the back branch belongs.

Account Number

The second part is of 12 characters and is the account number of the account holder.

Cheque Number

Cheque number can be of three or four characters and is used to check the number of the cheque in a series of cheques of the account holder. The cheque number and the number on the right-hand corner of the cheque should be the same. All these three components are surrounded by four more characters which are

• Transit

• Amount

• On-Us

• Dash

These symbols fix the boundaries of the bank code, account number, routing number, transaction amount, and parts of the account or routing number. Numbers and symbols available on the cheque are written in special fonts which can be either E-138 or CMC-7. International Organization for Standardization has approved these fonts.

MICR Readers

The tool that is used for checking, validating, sorting and processing is known as MICR Readers. When a document is scanned, the ink is magnetized by the readers and MICR characters are detected. The head of the MICR readers reads the characters when they pass through it. The head produces a unique waveform for each character to check the legitimacy of a cheque.

Fraud Detection

One of the major tasks of financial institutions is to minimize frauds. These frauds are of different types like −

• Tax fraud

• Credit card fraud

• Debit card fraud

• Securities fraud

• Wire fraud

• Bankruptcy fraud

MICR lines help in detecting some of these frauds with the help of unique fonts and tamper-proof magnetic ink.

Difference between IFSC and MICR

IFSC and MICR have many differences and some of them are listed below −

• IFSC is used to transfer money through NEFT or RTGS while MICR is used to detect the legitimacy of bank documents

• IFSC is of 11 characters while MICR is of nine characters

• IFSC is an alphanumeric code while MICR is only numerical

• Only bank and branch code is detected through IFSC while MICR also detects PIN code along with bank and branch codes

Difference between MICR and OCR

There are many differences between MICR and OCR and some of them can be found in the table below −

OCR	MICR
OCR can scan pages that consist of text	MICR can scan only special characters through the magnetic ink
Any type of printed text can be scanned	Only special information available on a cheque and other bank documents can be scanned
Different types of fonts are supported	It supports only E-138 and CMC-7 fonts
OCR is compatible with all types of inks	Only magnetic ink is used
Scanned data can be edited and printed	Scanned data is used to process cheques at a fast pace
No secure method is required	Secure method is required
Handwritten text can be scanned	It is not possible to scan handwritten text

Advantages of MICR

MICR has many advantages and some of them are listed below −

• MICR can be used to reduce some of the financial frauds

• MICR uses special magnetic ink to read the characters on the cheques and stamps and check their legitimacy accurately

• Processing speed of cheques is increased

• MICR is less prone to error

• MICR is more secure than OCR

• MICR can also be used in the following

  • Financial documents

  • Credit card invoices;

  • Gift vouchers;

  • Money orders;

  • Remittance vouchers;

  • Loan bonds

  • Rebate coupons

Disadvantages of MICR

MICR has a few disadvantages also and some of them are listed below −

• MICR is able to read only limited characters

• Alphanumeric cannot be used

• Printing format is strict

• The process is expensive due to the expensive iron oxide ink and strict printing format

Conclusion

MICR is a character recognition tool which can be used to check the eligibility of cheques and other financial documents. The full form of MICR is Magnetic Ink Character Recognition. It is mostly used in banks and financial institutions.

FAQs

FAQ 1: What is MICR?

Ans: MICR is expanded as Magnetic Ink Character Recognition. It is a technology used to detect checks with the help of unique magnetic ink and special fonts. Many types of frauds are made difficult to occur through this technology.

FAQ 2: Where MICR is mostly used?

Ans: MICR is mostly us in banks and financial institutions. MICR can also be used on credit cards, debit cards, coupons, money orders, etc.

FAQ 3: What type of ink is supported by MICR?

Ans: MICR supports only magnetic ink.

FAQ 4: What types of fonts are supported by MICR?

Ans: MICR supports E-138 and CMC-7 fonts only

FAQ 5: How many characters are available in the MICR line?

Ans: The MICR line consists of 9 characters.