When did you last write a check? In July 2024, Target became the latest retailer to stop accepting checks, citing “extremely low volumes” of customers paying by check. Use of checks — already declining before the COVID-19 pandemic — took another nosedive as consumers got used to contactless payment options. A February 2024 survey by GOBankingRates reported that nearly half of Americans hadn’t written a check the entire previous year. Learn what came after the check in this edition of Tech Time Warp.
But checks are still occasionally necessary, and it’s worth pausing to marvel at the development of check-processing technology by Bank of America (BOA) in the late 1950s. At that time, check use was growing exponentially, but an experienced bookkeeper could only process 245 checks in an hour, which meant BOA was closing banks at 2 p.m. each day to process the day’s checks. BOA worked with the Stanford Research Institute and later General Electric to develop a solution.
Digitizing the ledger
Enter account numbers instead of alphabetized accounts. The use of numbers instead of letters made it possible to combine bookkeeping and proofing into a computerized process. Banks began printing account, routing, and check numbers using magnetic-ink character recognition (MICR), a format still standard today. A machine called ERMA read these MICR-encoded numbers, enabling automated check processing for the first time.
ERMA stood for the Electronic Recording Machine, Accounting, and was represented by a cute mid-century illustrated woman in training manuals. ERMA sped up check processing by 80 percent, and by 1966, 12 regional ERMA centers served almost all of Bank of America’s 900 branches.
In May 2024, BOA donated an ERMA machine to the permanent collection at the Computer History Museum. See pages 6–7 of this October 1955 Stanford Research Institute newsletter for an early infographic showing the path of a check through ERMA.
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This post originally appeared on Smarter MSP.