A routing number, sometimes also known as an American Banks Association (ABA) routing number, is a nine-digit sequence of numbers that’s used to identify and send funds to specific banking institutions in the U.S. By possessing an ABA routing number, a financial institution is recognized by the ABA and in turn the Federal Reserve and any other federal or state charters.
Some banks can have multiple routing numbers. While small banks usually have just one, larger banks and financial institutions can possess several different routing numbers that refer to different regions, states, and other conditions.
Usually, routing numbers are required for people who are looking to complete a range of banking-related tasks. These can include ordering new checks, paying bills, establishing a new direct deposit account either through the workplace or another setting, and sometimes paying taxes or receiving tax payments back from the IRS.
Routing numbers are not to be confused with domestic or international wire transfer numbers, which differ from routing numbers and are only used for specific wire transfers. To obtain a bank’s wire transfer number, one must simply look online or contact the bank directly.
Routing numbers were first established by the ABA over a century ago, designed to make sure that checks were processed by and to the right financial institutions. Now, routing numbers are used for a range of other banking-related tasks.
While this is not always still the case, the first four digits of a routing number originally represented the physical location of a bank. But with how often banks change locations, merge with other banks, and are acquired, these numbers no longer always reflect a bank’s current location in the U.S.
The next two digits of a routing number represent which Federal Reserve bank is routing a transaction, while the seventh digit which processing center in the Federal Reserve processes the transaction. Similarly, the eighth digit represents the Federal Reserve district where the bank is located. Finally, the ninth digit is generated by a complicated equation involving the other numbers in the sequence, and is used as added security for transactions. If the result of plugging the first eight digits into the equation isn’t a final sum equaling the ninth digit, then the transaction is processed manually for security purposes.
Bank routing numbers can be found in multiple locations. One of the most commonly known spots to find your bank routing number is in the bottom left-hand corner of checks issued to you by your bank. The routing number is the first in a series of three numbers. The second is the specific account number associated with the check, and the third is the specific check number. On certain variations of official checks, these numbers may appear in a different order.
These numbers on checks are more than just about the digits. They’re printed with special magnetic ink, and processing equipment ‘reads’ this ink in order to process the account information associated with the check.
Working with checks is a delicate process, and one should always confirm the correct numbers before attempting to complete a transaction. This will help avoid headaches and bounced checks for the payer and their recipient.
To understand the difference between a routing number and account number, think of a hotel where your money is staying. The routing number is like the address of the hotel— it’s the same for all the guests staying at that particular hotel.
Your account number, however, is like your room number. Yours is different from everyone else’s, and it’s a more specific way of identifying where a package addressed to you is meant to go.
Your routing number tells financial processing algorithms and humans which bank you come from, and your account number is the specific bank account associated with you. This is all designed to ensure that the information about where funds in a specific transaction are going to or coming from is completely clear for both computer systems and human financial workers.
While routing numbers and account numbers are different, they work closely together to keep an individual’s banking information secure and guarantee that transactions coming to or from their account go exactly where they belong. Almost any basic banking transaction requires both a routing number and an account number.
It’s also important to note that anyone who wants to find the routing number for a specific bank can simply locate it online, but one’s account number is extremely private and should be carefully protected just like a Social Security Number or debit card’s pin code. If a suspicious character knows which bank a victim holds an account at, all they would need to initiate transfers from the victim’s account into their own is the account number—the rest of the information they could find with a quick web search.
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