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Anyone who closely examines a traditional paper check will notice two sequences of numbers printed along the bottom edge, with a clear mark of delineation between the two sequences. One sequence is the bank account number, and the other is the American Bankers Association routing number. The routing number designates which specific financial institution holds the account of the check issuer. Both numbers are essential in order to ensure that withdrawals or deposits affect the intended account. The ABA routing protocol also applies to electronic banking transactions such as direct deposit and electronic bill payment options.

Paper checks and paperless transactions initiate the same debits or credits from the perspective of the business banking account. Payments received from credit card processing through the use of merchant accounts result in electronic credits to the business account. Authorized withdrawals from the account result in electronic debits. The ABA routing number effectively guides each transaction through the financial network in order to reach the applicable bank location of the merchant account holder.

The routing number, also referred to as a transit number, is always nine digits. The digit sequence signifies how the transaction is to be routed and processed through the Federal Reserve system. The positioning of numbers within the sequence designates the specific location of the financial institution within that institution’s Federal Reserve district, and which data center will process the transaction. ABA routing numbers generally apply only to domestic transactions. The same routing number is valid for both paper and electronic transactions, but a different ABA number is used for domestic wire transfers.

Businesses with merchant accounts are reliant on routing numbers to facilitate acceptance of both credit cards and debit cards. A debit card transaction requires an immediate account inquiry in order to generate an approval code for a requested amount. Debit approvals are often dependent on the available balance in a specific account at a specific moment, and are approved and processed literally within seconds. Periodic settlements of both debit and credit card processing totals are automatically deposited into the designated account of the business, usually on a daily basis. An applicable credit card processing fee is usually deducted from gross proceeds in order to calculate a net settlement amount for automatic deposit into the designated bank account of the business.