As monetary transactions are not limited to financial institutions like banks, thorough verification is necessary before processing a transaction. To make the process faster, simpler and automatic, banks and other financial institutions rely on certain codes.
These codes, namely, MICR Code and IFSC Code, play a significant role in verifying the authenticity of a transaction. However, there is a difference between the usages of both these codes.
Let’s gather a clear understanding of both and learn how they differ from each other-
|IFSC Code||MICR Code|
|It is used to facilitate electronic money transfer between the banks in India.||MICR code is initiated to make cheque processing simpler and faster.|
|IFSC Code is an 11-digit alpha-numeric code||MICR is a 9-digit code|
|The first four characters indicate the name of the bank.||The first three digits represent the city code where the bank branch is located.|
|Last 6 digits represent the bank location||Last three digits indicate the bank branch code.|
What Is a MICR Code?
MICR is an acronym for Magnetic Ink Character Recognition. Primarily, this innovative technology authenticates the legality and credibility of paper-based document(s) in the banking database. It can be found on cheques. MICR is at par with IFSC as far as the security of a fund transfer is concerned.
MICR code is a product of highly advanced Character Recognition Technology (CRT) used by banks to verify cheques for clearance. MICR technology is used for other bank documents as well. An MICR code is placed at the bottom of a cheque. It includes details such the bank code, account details, amount, and cheque number, alongside a control indicator.
The biggest advantage of MICR technology is that it stands out among similar concepts, such as barcodes, as MICR can be read and distinguished by humans very easily.