An ABA Routing Number or Transit Routing Number consists of a unique 9-digit code that identifies a banking institution, and is usually found on the bottoms of checks and other negotiable instruments. This number is mainly used to authorize electronic deposits and withdrawals between consumer and merchant accounts within the United States. Larger banks assign different ABA routing numbers depending on a number of factors, such as what state the account was opened in, and whether the purpose is for electronic transactions or wire transfers. Every American financial institution is assigned at least one ABA RTN, which is used for direct deposits, check clearing, customer billing, credit card processing and other domestic purposes. International money transfers use different systems, such as SWIFT and IBAN.
The ABA RTN is typically printed twice on every check: fraction form and magnetic ink character recognition (MICR) form. The MICR form is printed on the bottom left side before the account number and is machine-readable, while the fraction form appears on the top and serves as a backup in case the MICR form becomes illegible. ABA routing numbers adhere to a strict format consisting of the Federal Reserve Routing Symbol, the ABA Institution Identifier and the Check Digit. Fraction form differs from MICR form in its use of hyphens and prefixes.
The American Bankers Association first developed the ABA routing number system in 1910 to expedite payment processing times by more quickly identifying each financial institution responsible for a check transaction. The system has since evolved over the decades to work with credit card processing, the Federal Reserve System and the Expedited Funds Availability Act. Even national debt payments have been transferred using the ABA routing network through Fedwire, the Federal Reserve’s real-time gross settlement funds transfer system.
Only federal or state chartered institutions eligible to maintain an account at a Federal Reserve Bank can be issued an ABA routing number. Accuity is the name of the official ABA Routing Number Registrar, which has served since 1911 and publishes the ABA Key to Routing Numbers, a semi-annual directory of active routing numbers. Also available online, this information facilitates merchant account processing by providing up-to-date information.