What Is a Routing Transit Number?
A routing transit number is a nine-digit number used to identify a bank or financial institution when clearing funds for electronic transfers or processing checks in the United States. A routing transit number is also used in online banking and clearinghouses for financial transactions. Only federally chartered and state-chartered banks that are eligible to maintain an account at a Federal Reserve Bank are issued routing transit numbers.
Key Takeaways
- A routing transit number is a nine-digit number used to identify a bank or financial institution when clearing funds or processing checks.
- The American Bankers Association (ABA) established routing transit numbers in 1910.
- These numbers are also used in online banking and clearinghouses for financial transactions.
- Routing transit numbers are often used when setting up a wire transfer or direct deposit.
- Whereas SWIFT or IBAN numbers are used for international transactions, routing numbers are often required for domestic transfers.
How Routing Transit Numbers Work
A bank’s routing transit number is located at the bottom of a check and is the first nine digits on the far left. The first four digits designate the Federal Reserve Bank of the district where the institution is located. The next four digits denote the bank itself, while the last digit is a classifier for the check or negotiable instrument.
The numbers following the routing transit number on a check are the account number and check number for the bank from which the funds are to be drawn. All checks written on state or federally chartered banks will have routing transit numbers on the bottom.
How Routing Transit Numbers Are Used
Routing transit numbers are often used when setting up a wire transfer relationship with one’s personal or business bank. A wire transfer is an electronic funds payment across a network administered by hundreds of banks worldwide.
While no physical currency moves among financial institutions during a wire transfer, information does pass between banks, including the recipient's account information, the receiver's bank account number, and the amount of the transfer. As a result, a correct routing transit number is critical to ensure sensitive information is directed to the appropriate receiving party and that the transaction goes through smoothly.
Routing transit numbers are also involved in direct deposits of money from employers paying employees and income tax refunds from the Internal Revenue Service (IRS). A direct deposit allows a sender to deposit funds directly into the receiver’s bank account electronically instead of issuing a paper check.
9 Digits
Routing numbers are nine digits long, while bank account numbers often vary in length. In addition, your routing number will always begin with a 0, 1, 2, or 3.
Routing Number vs. Other Banking Numbers
There are a few terms that are synonymous with "routing transit number," including "routing number,""transit number" and "ABA number." ABA is an acronym for the American Bankers Association, which established these numbers in 1910. The terms "routing," "transit," and "ABA" are often used interchangeably. Routing numbers were originally established for checking accounts but have since evolved to include identifying banks during electronic transactions as well.
A SWIFT code is a similar identification code used for facilitating banking transactions, though SWIFT codes are mainly used for international transfers. Alternatively, an international bank account number (IBAN) is a lengthy alphanumeric code that identifies the country, check number, bank code, bank branch code, and bank account number of a transaction. It is also mainly used for international transactions.
Special Considerations
Before the invention of the internet and the widespread use of computers, check fraud was a major issue. Fraudsters could falsify a routing number on a check and attempt to cash the check at a local bank. Without the banks being on an interconnected computer system, it was difficult to verify checking account routing numbers, leading to instances of fraud and theft.
LexisNexis Risk Solutions it he official registrar of routing numbers, and newly organized financial institutions must apply to have a routing number assigned to them. A single financial institution may have multiple routing numbers for different payment methods. For example, a bank may have a routing number specific for ACH transfers, paper transactions, or wire transfers.
What Is a Routing Number?
A routing number is a series of nine digits used to identify an institution. Banks use routing numbers to process transactions, as the routing number tells all parties involved which institutions are involved and which parties are receiving or distributing funds.
Where Can I Find My Bank's Routing Number?
Your bank's routing number can be found on the bottom of a paper check. Alternatively, you can often find the routing number when you log into an online banking portal. The routing number is often reported in the same location as your account number.
Which Numbers on a Check Are Routing Numbers?
When looking at a check, the furthest-left numbers is your bank's routing number. The left-most nine digits are the routing number, while the right-most numbers are your account number and check number. The check number at the bottom of a check will correspond to the check number in the upper right corner.
How Are Routing Numbers Used?
Routing numbers are used by financial institutions to communicate between banks. It is the number that identifies the institution you use so the transacting parties know where you account is located.
