ABA Transit Number Definition

What is an ABA transit number?

ABA transit numbers, also known as ABA routing or transfer numbers, are used to identify specific US financial institutions and appear on standard checks. Basically, it is a nine-digit numeric address for each bank.

Key points to remember

  • An ABA transit number is a set of numbers that identifies a specific US financial institution.
  • Without ABA transit routing numbers, it would not be possible to deposit a check using a mobile phone.
  • Each financial institution recognized by the Federal Reserve has its own ABA transit routing number.
  • ABA transit numbers allow employers to deposit checks automatically and for those checks to clear faster than a manual check.
  • Numbers are also used in Fedwire transfers, and each digit that makes up the ABA routing number plays a role in the process.

Understanding ABA Transit Numbers

Sometimes referred to as a check routing number, ABA transit numbers were developed by the American Bankers Association in 1910 to indicate check processing endpoints. Since then, the use of the numbers has expanded to include participants in check clearing between banking institutions, automated clearing housesand online banking.

Numbers are also used in Fedwire transfers, and each digit that makes up the ABA routing number plays a role in the process. In the past, the first four digits represented the physical location of the bank issued by the Federal Reserve Routing System. In 2019, due to the frequency of Mergers and Acquisitions banks, these numbers may not represent a physical location.

The next two digits represent the Federal Reserve bank used to route the electronic transaction. The seventh digit of the number identifies the Federal Reserve check processing center assigned to the bank, and the eighth represents the Federal Reserve district in which the bank resides.

The last digit represents a complex mathematical equation that uses the first eight digits. The checksum is a security measure. If the first eight digits do not match the last digit, the transfer is marked as questionable and redirected to manual processing, a much longer process.

If you are unsure of your bank’s ABA transit number and do not have a check handy, simply call the bank. They can give you the ABA number for the establishment over the phone.

The ABA routing number appears in two forms on most cheques: as a nine-digit machine-readable number at the bottom left (followed by the current account number) and as a fraction in high. The first form, known as magnetic ink character recognition (MICR) form, is the one used to process checks.

The second is a holdover from the days when checks were processed manually and contained most of the same information in a different format. The second form is always used as a backup in case the machine-readable format is unreadable. The number in MICR form, whether magnetic or not, allows computers to “read” or recognize numbers.

To qualify for an ABA transit number, a financial institution must be eligible to hold an account at a Federal Reserve bank.

Example of using an ABA transit number

ABA transit numbers are useful for receiving automatic payments, such as a paycheck. In this case, you give your ABA transit number as well as your current account number to your employer. The banks will take care of everything else.

In the past, physical paper checks were mailed to the recipient or the recipient’s bank, which took significantly longer than sending a check electronically. In 2004, the Check 21 Actallowed checks to be cleared electronically and almost automatically instead of having to wait for a check to arrive and then clear it in an account. The ABA transit number plays a vital role in the speed of check processing.

What is an ABA number?

An ABA number is a set of nine digits that identify specific US financial institutions. They are usually found in the lower left corner of a check or on the information portal of an online account. The number is used to facilitate financial transactions, such as wire transfers and direct deposits.

Do all banks have an ABA number?

Yes, all banks have an ABA number which is used to identify the specific bank and facilitate financial transactions. The ABA number can be found on a check issued by the bank as well as on a bank customer’s online portal.

Is there a difference between an ABA and a routing number?

No, an ABA number is also known as a routing number and consists of nine numeric digits to identify specific US financial institutions to facilitate financial transactions.